Antigua’s fuel market was hit by a double blow Tuesday as motorists were forced to pay more per gallon for gasoline and diesel, while most gas stations remained closed in a dispute over dealer profit margins. 

Effective Tuesday, the price of gasoline increased by $2 per gallon, from $14.40 to $16.50, while diesel rose from $14.25 to $16.25. 

The price increase comes as the government pulls back from a six-month effort to absorb rising international petroleum costs. An effort that prime minister Gaston Browne said is no longer sustainable. 

The subsidy has left the state owing approximately XCD $15 million to the West Indies Oil Company (WIOC) which sources and supplies these products.

Ongoing geopolitical conflicts particularly the conflict in the Middle East have been blamed for the impact on price and supply of fuel.

With the pump price kept stable, the government has also seen a significant decline in the consumption tax it collects from fuel sales. WIOC CEO Gregory Georges says this has been happening over the past six months.

The government is the majority shareholder in WIOC and therefore has a responsibility to ensure the company remains financially sustainable. So far, however, the state has paid millions of dollars to WIOC to maintain the existing retail prices.

Georges says Antigua gets its petroleum products from “a US-based, very reliable supplier,” which imports 100 percent of its petroleum requirements to Antigua from the US Gulf. 

With the Strait of Hormuz closed that removes approximately 20% of the world’s global supply. The immediate impact is that a drop in the supply means an increase in price from markets that step in as alternatives.

Georges says Antigua has therefore imported that cost which has been compounded by other variables throughout the system.

“We really have no control over here on our small island over the cost of petroleum products. And therefore, all we can do on our end is manage it as carefully as we can,” he insists.

Even with Tuesday’s $2 increase, however, Georges says the government is still subsidising fuel only at a lower level.

Compared to petrol prices across the Eastern Caribbean, Antigua still ranks amongst the lowest.

But as consumers began adjusting to the higher prices, another problem emerged.

Gas station owners shut down operations, arguing that their current profit margins are no longer enough to keep their businesses operating.

According to Georges, station owners receive XCD $1.08 on each sale; a margin that was last changed in 2010.

“I would think that the $1.08 they’re saying is insufficient to run the business today and they are looking for an increased amount,” he says.

No official representing the group has spoken publicly about the shutdown.

But Prime Minister Browne, in a social media post Monday night, said that at a time when the government had eliminated its own margin in an effort to keep fuel prices down, gas station dealers were “threatening to close”.

He said the dealers’ demand for an increase could not be justified at this time and questioned whether they were prepared to “further burden their customers during an escalation in oil prices.”

Nevertheless, by Tuesday morning, fewer than five service stations had opened for business – the majority of them owned by WIOC.

The limited number of open stations quickly translated into long lines and a backlog of traffic, with motorists waiting well before the stations opened.

Later in the day, additional stations reopened as discussions continued between the owners and the government.

By the end of Tuesday, Browne said the station owners had agreed to reopen their businesses while the government assembled an expert team to review whether their profit margins should be increased.