The price fixing mechanism of our unleaded fuel, diesel and gasoline seems to be working on random formulae. Tonio Fenech, the Minister for Finance gave details of the cost of Brent oil and the respective selling prices of the above oil by-products for the period 2005 to March 2012, in a written reply to a Parliamentary question put by PL Member of Parliament Joe Mizzi.
As a standard business procedure, the market normally establishes consumer prices based on supply and demand. In Malta, Enemalta’s petroleum division and the PN government set prices according to political needs and fiscal requirements. As an example, in January 2008, the pride of Brent crude rose by 68% whereas the cost of LRP in Malta rose only by around 10% in the same month. On the other end of the scale, in January of the following year, a barrel of Brent crude cost 66% less than it cost 6 months previously; yet the price of fuel was only reduced by 17%.
Tonio Fenech’s reply shows that the price paid by the Government in March 2012, was almost identical to that paid in May 2008. The cost of one litre of unleaded petrol then, was Euro 1.09, yet in March this year, the same amount of fuel cost Euro 1.45 – a difference of 33% which the Maltese public is forced to pay to subsidise something completely extraneous to the price of Brent oil.
GonziPN cannot provide any consistency in the administration of prices for petroleum products in Malta. Since March of this year, the price of Brent crude has been decreasing and is expected to continue to decrease. In fact, Brent Oil futures quote prices up to June 2018. These prices are a reflection of the current price which is approximately 23% lower than that quoted by the Minister in his reply to the PQ for March 2012. Yet, since last March, the price of fuel has increased by 3.45%.
The EU’s energy portal quotes the average price of LRP in Europe at 1.512, when in Malta the cost of one litre of LRP costs Euro 1.50. This is a mere 0.8% lower than the average and on a weighted scale of the average wage earner in Malta; the cost of fuel would by far exceed that of the EU average.
The Labour Party has criticised the government on the price increases in petroleum products several times. The PL has also queried the buying patterns of the government in the petroleum sector. Families and businesses have been severely affected by this inconsistent and unjustified price fixing mechanism. It is quite possible that the price increases are meant to attempt to reduce the deficit of Enemalta. The people do not expect to pay for managerial mistakes. The government should set and publish the relevant price–fixing formulae, for the sake of transparency and accountability.