The increase in the range of petrol and related fuels used in Malta was very substantial, at a five per cent broad average. It caused a predictable angry reaction from commercial and domestic consumers alike. The remarks made in The Times blogs were largely of a political nature. There were few neutral comments. The rest would have made the Prime Minister and his team walk the plank if they could.
The reactions were understandable, even if in some regards exaggerated. People have been struggling with a rising cost-of-living for many a month. Though recently, the upward trend in the Retail Price Index seems to have turned, many feel that is only a statistical illusion. Purchasing basic daily needs still punches a big hole in the pockets of average earnings.
Add to that the fact that the massive hike in water and electricity tariffs has started kicking in. I do not believe that any or many bills have been issued based on actual meter readings. But estimated bills based on last year's consumption have been received. Worked out at the new rates they have started showing the expense picture as it will be when bills related to actual consumption will be sent to households.
Other prices have also increased, but consumers do not always tend to disaggregate their basket of goods. It is "government" bills, even more so than the index of "government" prices, which is starting to attract political attention. The living is not by any means easy.
Mgr. Victor Grech, of Caritas, has spoken out about the poverty gripping many people, suggesting that poverty is far more widespread than we tend to believe and observing that the basic wage is far from sufficient to keep individuals and households about a poverty line reflecting today's prices and, thereby, purchasing power.
Fr Hilary Tagliaferro, who also carries out sterling work of assistance to the needy, aided by brethren and a team of dedicated individuals, has confirmed that poverty is more far-reaching than the statistics reveal. He knows of people, for instance, who cannot afford to replace a fridge or a washing machine when they refuse to work any further.
People on low incomes feel the pinch most. But the decline in purchasing power is felt along all strata of our society. That is why, perhaps, people do not pause to consider whether some price increases are inevitable, or why they make a completely wrong reading of the situation. One Times blogger, for instance, claimed that increase in fuel prices will be reflected in a five per cent rise in the cost of living, as if fuel, directly and indirectly, accounted for 100 per cent of the basket on which the RPI is calculated or, worse, on everybody's consumption basket.
That interpretation was probably due to an error of expression. In other regards quite a number of bloggers made telling remarks. I have rarely read a more wretched statement than that with which Enemalta seemed to try to justify the latest increase in fuel prices. In a nutshell, as well as in suspicious English, the corporation attributed the hike to the rise in the international price of crude oil, and in the fall of the value of the euro relative to the dollar, in which crude oil and its fuel derivatives are priced.
There is no gainsaying, crude oil prices have gone up and the exchange value of the euro against the US dollar has gone down, and sharply so in both cases. But, readers asked, has there been any hedging on both counts by Enemalta?
That is a fair question, one to which the corporation has offered no reply. When it came to purchases of fuel to produce water and electricity, we have it from the Prime Minister that the requirements for the whole of 2010 have been hedged against. He did not elaborate on whether Enemalta had covered both the oil price as well as the exchange rate. At least, though, he gave partial information. Not so when it came to petrol and related prices. Did Enemalta hedge, or did it not?
The corporation is now under the responsibility of the Finance Minister. He is personally a financial man. He should make the corporation start giving it directly to the public. In fact, he should do more than that.
Aside from requesting reports on why there has been yet another island-wide power failure, turning Good Friday into Terrible Friday, he might do worse than commission an expert report on how to end Enemalta's monopoly as early as can be. I'm not saying scrap the corporation. Make it be only one of several suppliers. At times it is useless to look back, yet the minister and the rest of us might learn something from studying how the game used to be played when we had three petrol suppliers, in Esso, BP and Shell, and move forward from there.
Having multiple suppliers should take the direct heat for price movements off the government of the day, as it should then be better understood that suppliers can only hedge so far, and not necessarily get it right all the time, against international price movements.
On their part, consumers should get a better deal, in terms of choice at competitive prices, under the eagle eye of a sensible regulator.
At least, so one hopes.