The government’s announcement that the prices of both petrol and diesel have been, as of yesterday, raised by four cents per litre has gone down like a lead balloon.  And in so doing the government has chipped away at its mainstay bragging right: that the economy is doing great and that the government is putting money into people’s pockets.

The current issue is with the prices that Maltese drivers are currently paying at the petrol and diesel pumps are viewed as exorbitant when compared to what many of their fellow Europeans are paying.

The public’s reaction to the fuel increases, which will hit any sector of the economy that relies on road transport in any way, shape of form - as well as commuters – has been harsh and uncompromising.  People from both sides of the political sphere have, in fact, reacted with outrage.

The government has attempted to soften the blow by explaining that this is the first price hike at the pumps since 2014, that all European countries have raised the price of fuel over the last three months, that the new prices reflect the international price of oil, and that these new prices will remain locked until March.  It also said that the price of energy will remain untouched.

There are, however, several problems with these statements.

Europe and the rest of the world have been subject to historically low oil prices, and consequently low prices at the pumps over recent years.  Malta, however, has scarcely benefitted from those slumps in oil prices because of its hedging agreements.  While the rest of Europe over recent years had benefitted from those slumps, Malta’s drivers had no such luck.

Hedging is a bet and it can work in either of two ways: in your favour or against it. In the government’s case, it has undoubtedly been a little of both. The government had guaranteed stability at times when oil prices were higher, but was stung when those international prices took a steep downward turn. 

But the fact of the matter is that, whatever the case, consumers are fuming at the petrol pumps after learning of the drastic cuts in other European countries that were nowhere near matched in Malta.  Nevertheless, the government’s hedging dealings have been a closely guarded secret since they were struck.

The fact that these new prices as announced will remain locked until March is, meanwhile a double edged sword.  International prices may very well rise further but, then again, they may also decrease - leaving Maltese consumers once again in the lurch. 

And as for the statement that the price of energy is to be unaffected is pretty much a no-brainer and as such it is an empty statement clearly intended to be a sweetener for the bitter pill that drivers are to swallow like it or not.  It would be a real scandal indeed if the government were to actually increase the price of energy once we are on the cusp of converting to natural gas.

The increase in prices at the pumps will continue to resonate through to March, and possibly beyond should those prices not be reduced then.  This, in turn, will give the opposition ample ammunition and it will find a receptive audience amongst the public that is incensed over the increases. 

The best the government could do at this point is to explain, in finite detail, its fuel purchasing agreements – from Azerbaijan or elsewhere – so that, at the very least, the public knows why it is paying what it is at the petrol pumps.  But full disclosure on such deals is not something this particular government is known for.