Gasoline gougers get wrist slaps

PANAMA. Government actions to curtail price gouging by oil companies started before the recently imposed price ceiling according to Commerce Minister Carmen Gisela Vergara. In the last eight months there have been 27 operations to ensure that gasoline stations are not carrying out monopolistic practices, she said.

The Consumer Protection Authority (Autoridad de Protección al Consumidor y Defensa de la Competencia) ACODECO, has initiated several lawsuits against monopolistic practices of oil companies and gasoline stations.

Vergara made the statements before the National Assembly when asked to give answers about local fuel prices.

She said that the Ministry of Commerce and the ACODECO carry out inspections and sanction, according to the law, those companies that break the regulations. In that light, four fines of $15,000 have been imposed to import companies and distribution enterprises, making a grand total of $60,000.

In 2007 five gasoline stations and three import companies were fined for not complying with the registry, totaling $29,000.

Two companies involved in the Llano Bonito fire were each fined $10,000 and between 2002 and 2007 the ministry fined two transport companies with $5,000 for spilling products.

Vergara explained that in an open economy the consumer rewards with his preference companies that sell the cheapest products and punishes those that sell at a higher cost.

That is why the government publishes the prices so that the consumer can actively participate in the market and can report any breaches against his rights to the authorities.

The government has recently imposed a ceiling price for gasoline with the aim of helping consumers deal with the effects of high oil prices worldwide.

The Executive also authorized $6 million of subsidies to be distributed along the commercialization chain, a figure that widely surpasses the fines collected for misbehavior in the last years.

The decision by the government is not favored by the economist Rolando Gordon, as according to him, the oil companies are the most benefited.

“In the end, it is the Panamanian people who are paying this amount, added to the increase in the the price of 91 and 95 octane gasoline.

He also believes the initiative is nothing more than a “band-aid” that does nothing to alleviate the root problem.

In the midst of the controversy independent distribution companies claims that they are outside of the scope of benefits. One source claimed its company “was losing between two and three cents a gallon.”

As for the fines, the government promised Jorge Quintero, national director of the Consumer Protection Agency said that in the first operating days irregularities were detected in six gas stations, now under investigation.

The question remains whether the policy will end up helping consumers for the 15 days of implementation, and what will happen if the price ceiling is not continued.

Francisco de Ycaza, secretary of the Hydrocarbons Committee of the American Chamber of Commerce and Industries (Amcham), argues that prices will remain high, independent of government actions.

How long will the government be able to subsidize oil companies creasing?

And to whose benefit?