With this country being 100% dependent on the importation of all its fossil fuels to run its power stations and the ever-growing number of vehicles plying the roads, the cost of that imported fuel is always bound to be an extremely sensitive issue.
We have seen it time and time again when it comes to the cost of electricity – such as in the cases of the introduction and removal of and infamous fuel surcharge, and when the previous Nationalist government had entered into hedging agreements that did not work out quite so well for the public coffers.
The current issue is with the prices that Maltese drivers are currently paying at the petrol and diesel pumps – exorbitant prices when compared to what their fellow Europeans have been paying over recent weeks after the plummet of international oil prices.
Since the government entered into its series of fuel hedging agreements and reduced prices at the pumps by 2c last May, we have no doubt that these agreements had safeguarded against price and exchange rate volatility and that the relatively more recent drop in oil prices could not have possibly been foreseen – by anyone. In fact, who is to say that international oil prices will not rise again tomorrow to new and unprecedented levels?
Hedging is a bet and it can work either of two ways: In your favour or against it. In the government’s case, despite the vociferous objections from the opposition, 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.
In fact, while those agreements surely helped to contain prices when international oil prices were far higher in 2014, research carried out by our sister Sunday newspaper shows that since the severe deflation of international oil prices the government has been ‘losing’ close to half a million euros a day when taking into consideration pump prices in 2009, when oil prices were pretty much the same as they are now, and today’s pump prices.
But the fact of the matter is that, whatever the case, while consumers are fuming at the petrol pumps after learning of the drastic cuts in other European countries. Nevertheless, the government’s hedging dealings have been a closely guarded secret since they were struck.
On Monday, petrol and diesel prices were cut by four cents after the government said a number of those agreements had closed off, resulting in the 4c cut. More hedging agreements are due to expire over the coming months, which will be followed by still more price cuts.
But the nature and expiry dates of those agreements have remained completely undefined and unexplained, much to the consternation of both the opposition and for that matter the public at large.
As such, the opposition has been calling for a debate on the government’s hedging policy and that debate is now scheduled to be held on Monday. But without the right, or in fact any, information in hand, this debate is bound to go the same way that the recent energy debate went, absolutely nowhere, and for the same reason – because the government will not allow the truth to be known about its agreements in the energy or fuel importation sectors.
This kind of attitude is outrageous and unbecoming of a 21st century democracy.
The people have a right to be informed of the details of government-negotiated contracts, whatever the subject matter or their content, but most especially when those contracts have the most direct bearing possible on their disposable income and hence their quality of life.
The government has clearly hedged its bets when it comes to disclosing the whole truth behind its hedging agreements and it has decided to go for an information blackout, as appears to be its preferred modus operandi.
The full disclosure of the government’s hedging agreements is not an opposition versus government matter – it is a matter for consumers, who deserve to know exactly what is going on.