Bahamas: What's the fallout from oil-price hikes?
Not surprisingly, oil prices are climbing, due to instability in Venezuela and the Persian Gulf.
Last week, the price of a barrel of crude reached almost $40, the highest since 1990, when Iraq invaded Kuwait, and about 69 per cent higher than last year.
According to the New York Times, "every time oil prices have risen by at least 60 per cent since World War II, a recession has occurred in the United States, with the exception of a one-month blip in oil prices in 1987."
Higher prices for crude oil have a multiplying effect that flows through the global economy, raising the costs of transportation, production, heating, and other activities. Energy costs are the single most significant indicator of economic trends.
And once again, airlines are being hit hard. The Times reported that American Airlines, a major carrier to The Bahamas, will spend more than $200 million extra on fuel this quarter than in the same period last year. Analysts are predicting that oil costs will soon force American to file for bankruptcy protection.
But how this will affect the Bahamian tourism industry is anyone's guess at the moment, because the politicians responsible for managing our economy are not talking.
Perhaps they are counting on government price controls to resolve the problem.
3/4/03