Gas hits $7.72 a gallon on Island

Extracted from the Royal Gazette (www.theroyalgazette.com)

By Tari Trott

The cost of a gallon of gas is nearing the $8 mark – as business leaders warn increases in oil costs will be passed onto the consumer. Oil prices have been rocketing with record prices being recorded, earlier this week the price of a barrel of oil reached $135. In Bermuda this week gasoline increased by 11.3 cents per litre, diesel by 10.7 cents per litre and kerosene by 9.5 cents per litre. As a result the maximum retail prices that can be displayed on the pumps for gasoline is $2.04 per litre ($7.72 a gallon in America), 196.90 cents per litre for diesel and 171.10 cents per litre for kerosene.

Chamber of Commerce President Mr. Phillip Barnett told The Royal Gazette: "Obviously the affect we will feel in Bermuda is going to be that much more profound. "This is Mr. Barnett added: "Our concern is the price will effect the cost of electricity. Segments like the water sports division will be very concerned because this will impact their profitability. "Also, our offshore charter fishermen will see a significant impact and I think we can only hope that the talk of (increasing fuel prices) and us being in a bubble and the prices will eventually decrease — there's some validity to that. Every person in Bermuda will be affected by this because fuel increases touch on everything because we ship virtually everything in."

Environmentalist Stuart Hayward, also the head of the Bermuda Environment and Sustainability Taskforce (BEST) cautioned that the fuel price rise might have an impact on visitors. He explained: "Given that many US residents are curbing their holiday travel (driving) due to rising gas prices, Bermuda may well find our potential visitors cutting back also — which, if so, would decrease incoming foreign exchange.

Our driving habits, particularly of larger two and four-wheeled vehicles at faster speeds, will increase our foreign expenditures (for vehicles, repair parts, and gas). So at the 'macro level' we have less money coming in combined with more money going out, with no increase in derived value to show for our trouble." And he predicted that residents are likely to resort to using their bicycles for transport as a cost-cutting measure.

According to the New York Times oil prices leapt above $135 a barrel in overnight trading on Thursday, a new record that underscored the growing pressures that runaway energy prices are placing on some of the biggest names in global industry. Prices fell back in the course of the day, the paper reported, closing at $130.81 on the New York Mercantile Exchange. Gasoline prices are nearing $4 a gallon in the United States, partly as a result of a 39 percent rise in the price of New York oil futures since the start of the year. Prices have more than quadrupled since 2003.

American Airlines said on Wednesday that it would slash flights and begin charging passengers to check bags, part of a company effort to cut costs in the face of skyrocketing fuel prices. It is also charging $15 for the first piece of luggage, although that only affects internal flights.

Oil futures spent months dancing around the $100 a barrel. But in the last two months, prices have taken off, gaining nearly $20 a barrel in May alone.