[WATCH] Busuttil: consumers should not pay the price for 'wrong hedging policy'

Busuttil: fuel prices must reflect international oil prices • Video by Ray Attard

Opposition leader Simon Busuttil has said that consumers should not bear the costs of high prices when Enemed, the government petroleum company, buys petroleum at a high price.

“If the government locks prices at a higher rate [and prices then go down] the consumer should not bear the brunt of that mistake,” Busuttil told the press after a meeting he held with MCESD stakeholders on oil and fuel prices.

The meeting was not attended by the General Workers Union.

Busuttil said that the last administration adopted both hedging agreements and open market purchases to lower prices when the international price of oil goes down.

“Our policy was clear. Every time the international price of oil went down, a mechanism would kick in and the price of fuel would go down as well. This used to be announced at the end of the month by a simple press release. It would also go up according to the international price,” Bususttil said, when asked whether he was in favour of a short-term or long-term hedging agreement.

“With its argument to ensure price stability, the government has locked prices at higher rates. Why should consumers pay for higher prices for Enemed’s mistake? Hedging agreements can go wrong, but the consumer should not suffer.”

Pressed by journalists to explain whether he was asking government to rescind on the hedging agreement which locked prices for six months, Busuttil reiterated that consumers should not pay higher prices: “It is the company’s problem if this particular agreement went wrong. Explain to me why the consumer should bear the brunt of Enemalta’s mistake.”

Oil prices suddenly spiked more than 8% on Friday yesterday to $53 for Brent crude, the biggest one-day price movement for crude in nearly three years, according to the New York Times.

The sudden move upwards, after oil fell by over 50% down to almost $49 this week, apparently came after American rig counts dropped by 7% or 94 – leaving 1,223 rigs in operation, and fears that another 300 rigs will be decommissioned in the next months.