The Kerosene Subsidy Removal

Thursday, September 6, 2012

The Kerosene Subsidy Removal

32 comments:

Laborian said...: Micah this article like most of what you write is found wanting!!

I will agree with you that the UWP's press release is grossly incompetent at its attempt to address the issue.

You noted "It has been shown that out of 58,920 households in Saint Lucia (2010 Population and Housing Census) only 733 households use kerosene as fuel for lighting."

This number of 733 households is inacurate, since there are many places which are devoid of electricity.

Furthermore the persons who use kerosene as fuel for lighting do so due to being unable to afford other means even when available. So to take the subsidy away from those "poor working class" individuals is indeed an assault.

The middle class is better able to sustain themselves and adapt than the working class. So why then remove their subsidy and maintain that which is beneficial to the middle class?

Your attempt to explain such actions simply shows how far out of touch you are to the working class.

I for one grew up using kerosene lamps even while at A'Level. Trust me it was not out of choice. Please feel free to entertain a reality check...Laborian; September 6, 2012 at 9:43 AM
Anonymous said...: i am with u 112334556890-76653223%%%%%
tax and vat my ass????; September 6, 2012 at 9:49 AM
Anonymous said...: Please, please, please, don't say anymore. We can't take anymore of your illogical, nonsensical BS Micah. In the same way you asked whether Stephenson King saw the UWP press release I must ask whether your Editor saw your commentary before you went to print? You contradict yourself from top to bottom when you adduce figures from the 2010 Census that shows clearly that: 97 households (or 300 people, based on an average household size of 4 persons) still depend on kerosene for cooking; and 733 households approx 3000 people) rely on kerosene for lighting. By your own admission these people are poor. So for heaven's sake how will these poor people afford to pay nearly $5.27 more for a gallon of kerosene? And how does exposing kerosene users to such a huge increase, while shielding LPG users help kerosene users? I hope by now your folly will be clear to you. It's as if you're saying that kerosene users are no longer poor because they will now have to pay nearly #6.00 more for fuel to cook and light up their homes? This daft dribble from you indicates clearly that you do not have the "intelligence, insight and sound judgment of the business of politics in our country" that you expect Saint Lucians to possess.; September 6, 2012 at 10:20 AM
Anonymous said...: Laborian, there is nothing wrong with the UWP Press Release. You yourself have proved this with your very salient observations. Not only is Micah out of touch with the working class, he's also out of touch with his brain.; September 6, 2012 at 10:25 AM
Anonymous said...: Look like I am going to have to give LPM a vote next time. I am really tired of this blame game.; September 6, 2012 at 10:34 AM
Anonymous said...: Pathetic Micah! Why should the kenny administration remove the kerosene subsidy and hurt the poorest of the poor who need it? Garcon, your recommendation is rooted in selfishness and disregard for the indigent and poorest of this country.

Micah, you must also understand that if my government (SLP) that I have supported all my life does not wake up and engage in sound decision making we will not be able to make a turn towards election victory at the polls. I am totally opposed to the clicks that Kenny is embracing in our government. Can you imagine what would happen if the Flambeaus can get the acts right and clean up their house? Can you imagine what could happen to us (SLP)if King gives up the leadership to someone like Titus Preville that St. Lucians across the board respects and love? Can you imagine what would happen to us if Frederick gives up his position in the UWP and supports another qualified person? Garcon, if those things were to happen before Kenny starts doing things right and start putting out incompetent boys and girls; putting qualified persons who worked hard during the campaign in our government and not Fletcher and LaCorbenierre etc we can very well kiss an election victory goodbye. This is serious matter. If Kenny is tired, sick or too frustrated to run this government well then Pip or Emma should step in.; September 6, 2012 at 10:44 AM
Anonymous said...: KENNY, KENNY KENNY IS THE M---M---T---M. OF U ALL SO SHUT UP NOW!!!!; September 6, 2012 at 12:41 PM
Anonymous said...: Two issues. For starters: most writers on Saint Lucian economic and business issues do NOT base their arguments on hard numerical data. It is just plain foolish PARTISAN emotion almost all of the time

That is why our parliamentary debates and our budget debates are generally exercises in bs-ing the public.

Second: Micah is missing an important part of his very insightful article: How many gallons of kerosine is consumed at the national level on an annual basis, AND the cost of the importation to us, in terms of the trade figures and foreign exchange.

Perhaps, recent data are not available and older data do NOT serve as a useful guide.

Again, without a native/personal appreciation for basing argument on hard data, the OECS/local compilers, or what have you, will always sit on their haunches and be always be willing to oblige and happily provide published data, (and in some cases) ... the most recent being ... for year 2006!

Next: The subsidy removal has two LARGE potential benefits: Perhaps a change in demand for kerosene WILL take place, and less dangerous substitutes (house fires and personal accidents come to mind: poverty fuels its own brands of hardships.) or more than one renewable fuel (energy source) will replace it, in terms of household usage.

The second issue: Now what's missing from a great many policy initiatives by our many lame-brained politicians [Read: simply vote-getters and not much else politicians] on both sides of the isle or political divide, is the recognition of the need for the simultaneous introduction of policy initiatives ... with compensating mechanisms to cushion the downsides of those measures.

Whatever balance of payments benefit or foreign exchange benefits that may inhere in the subsidy removal and/or fuel substitution that may occur, the appreciation, foresight and insight necessary to build in a much-needed transitional economic cushion ARE JUST NOT THERE.

This to me, this is the greatest weakness afflicting general economic policies of the well-meaning political directorate of either party.

But as they say: 'The road to Hell, is paved with good intentions'.; September 6, 2012 at 3:05 PM
armchair anonymous said...: ahem!! Well said to all bloggers (except 12:41 whom I could never understand, far less, fathom).

Kerosene is not only used for cooking and fuel, but has a number of other valuable uses as well ... as a potent insecticide, cleaner, lubricant, etc. As an oil based commodity, the subsidy should not be removed. At all!!

Kerosene is found in a lot, a lot, of homes in all levels of society for such uses. I for one, am never without K.Oil in my house!; September 6, 2012 at 3:48 PM
Anonymous said...: The person advising Kenny on those issues and others should be fired! Why did they have to push away and frustrate a true Economist (Dr. Ubaldus) in favour of one (St.Lucians don't know) who is sending us to hell without our permission. Kenny you and your click are getting me sick to the stomach. I will never vote SLP not until Kenny, Fletcher, laCorbiniere, Finnistiere, Montrope and others are out of our party. Sorry to put it so bluntly, and having to use this medium to do so. I am simply angry and frustrated with what's happening in SLU. I expected better but anyway TEAM LABOUR is nowhere around.

Angry labourite; September 6, 2012 at 6:15 PM
Anonymous said...: If the number of households using kerosene is 797 then why couldn't the government target these households and provide them with the subsidy? Kenny look in the right direction if you want to cut cost. First start with your office. Did I hear that your PS in finance salary and perks add up to $52,000? He must be one of your boys. Reginald I believe is his name. Kenny, your boys will bring you down.; September 6, 2012 at 7:17 PM
Anonymous said...: I firmly believe that the PM is REALLY carrying out a 'recommendation' of the IMF or is trying to close the budget gap.

In addition to removing ALL economic subsidies to close or reduce the budget deficit, look out for future bailouts from government holdings of government business units that can be privatized.

And it can become a great deal more difficult, if especially, the government revenue inflows stubbornly do not cover recurrent expenditure.; September 6, 2012 at 7:37 PM
Anonymous said...: Blogger at 3:05 pm:
You should have written the article. Your post was much more interesting and sensible and easier to read than the article itself.; September 6, 2012 at 8:45 PM
Anonymous said...: I'm assuming the people who are still using kerosene for cooking or lighting are doing so because they cannot afford to use anything else. So removing the subsidy means they have to pay more. How are they going to do that if they could only afford kerosene in the first place? How much will removing the subsidy actully save the government versus the impact on the families?; September 6, 2012 at 8:50 PM
Anonymous said...: Kenny is behaving like a true joker to sideline Dr. Raymond, and now I am hearing that his new PS is getting $52,000 per month (that is including perks). You Kenny and your click sideline the man(Dr. Raymond because he was the most sincere, objective and qualified person) including Dr. Long and Sis.Haracksingh for what?

I am hurt, I am angry, I am frustrated because persons who toiled hard with TEAM LABOUR are pushed over for Kenny's boys and girls.

I AM LABOUR BUT I WILL ENSURE THAT MY PARTY IS PURGED OF THOSE GREEDY AND SELF-CENTRED POLITICAL MONGRELS!!! KENNY TAKE NOTE. EMMA OR PIP FOR LEADER!!!; September 7, 2012 at 6:48 AM
Anonymous said...: $52,000 per month? Is this true or just speculation?; September 7, 2012 at 7:06 AM
Anonymous said...: Annonymous @ 3:05, you say Micah's article was "very insightful". If anything is insightful about it, it's that Micah revealed himself to be a total idiot. It's bad enough that this policy was passed, it's worse that Micah supports it.

I for one can't see how forcing poor people to pay nearly $6.00 more for kerosene will reduce their demand for it, especially when alternatives are more expensive and when kerosene users remain poor. Most of those who would have moved to LPG would be those who situations have improved enough for them to do so. And I don't buy the argument that kerosene users are any more at risk of fires etc than non-kerosene users. Certainly the large proportion of fires that we've had in Saint Lucia have been in the homes of electricity users.

Secondly I don't agree that the problem here is outdated data. Micah based his commentary on 2010 data which is fairly recent. That data is adequate to allow one cricial conclusion: that the number of people using kerosene is too small to make any serious dent on the Consolidated Fund.

I agree wholeheartedly with you though, that simultaneous compensatory mechanisms should have been considered. How about policies to alleviate the poverty of kerosense users? How about targeting STEP/NICE programs at them? How about targeting them for a higher subsidy for LPG use? Micah suggested none of these things. Instead he went on this diatribe.; September 7, 2012 at 8:51 AM
Anonymous said...: Kenny and his internal click should consider their lack of good judgement in several cases, and rethink their approaches to good governance. It is my hope that Labourites will decease from critizing our government especially close to election. It is definitely in good taste to chastise them now so they can reshape and regroup for more effective leadership and governance. I miss Dr. Raymond and something tells me that Kenny and his boys treatment of him will hang over our heads for a long time. Hope we learn from our mistakes.; September 7, 2012 at 9:04 AM
Anonymous said...: I for one can't see how forcing poor people to pay nearly $6.00 more for kerosene will reduce their demand for it,
===============
I do not see it as stimulating a greater demand for it either. That is unless of course, the basic laws of demand and supply for what remains a commodity changed suddenly overnight.

Folks, please! I do NOT know that Micah is an economist by training. And don't tell me that because he is NOT, he should not put forward his opinion!

Next: I did NOT hear or see any evidence to show what the actual cost of kerosene to the economy. No evidence of convincing RECENT data was presented as a counter to what Micah, (like those who would want to base their analysis on something other than emotion), may not have access to the necessary data.

There is no need to round in circles on this issue.

One question: Is there a large number of kerosene STOVES in use in that number of poor households quoted in the report?; September 7, 2012 at 10:27 AM
Anonymous said...: Anon @ 10:27 (something seems to be wrong with the timing here).

Do we need data on the actual cost of kerosense to the economy to determine whether this is good or bad policy? Can't we not agree that it is ridiculous to ask people who are so poor to use K-oil, to pay more to use it?

The only reasonable conclusion that one can reach from this policy is that government's intention is to condemn poor people to starvation and darkness.

As for Micah, I'm not saying he can't express his opinion. But in this case his opinion is to criticize the opinion of others (in this case the UWP) on patently flimsy grounds. This has nothing to do with whether Micah is an economist or not. BTW, economists are not immune to writing crap. This is not about economics, this is common sense.; September 7, 2012 at 12:22 PM
Anonymous said...: 1) Do we need data on the actual cost of kerosene to the economy to determine whether this is good or bad policy? 2) Can't we not agree that it is ridiculous to ask people who are so poor to use K-oil, to pay more to use it?
===========
Let's take the first point first: In the economic 'School of Hard Knocks', if policy arguments are not based on numbers, arguments are matter-of-factly, just hot air!
If the departure point or judgement are not based on reliable figures, one cannot ... REASONABLY ... argue for ... nor against a policy ... other than to present a 'gut feeling'! That is NOT the way the real world works. Where is the objectivity?

At the macro-economic level, you must take care of ALL constituents. But darn it, if the policy-maker is TOTALLY CLUELESS about the BENEFIT/COST of a policy initiative, the electorate may as well just elect monkeys to parliament to do decision-making -- without reliable baseline and other data. By the law of averages, monkeys will get some things right ... sometimes. But, is this how Saint Lucians should CONTINUE to manage our affairs going into the future?

Is this how developed countries do it, became developed, or make progress?

Now to the second question: Just making an argument that the poor, since they use kerosene for lighting, should not pay the full cost of the product, seems right ... but ONLY on the surface.

This is an emotional argument, steeped in the commonsense wisdom of a mere child. But can you see how morally bankrupt this argument really is?

Note, the very large number of people who are being CONDEMNED TO A LOWER STANDARD OF LIVING, to read by kerosene lamp light, indefinitely ... simply because they are poor! Poor and misplaced sensitivity?

Enlightened leaders would get the people so affected ... to shift their demand for household lighting TO ELECTRICITY FROM KEROSENE ... or to some renewable form of energy.

Nonetheless, without reliable data, on the demographics (households, places of residence, incomes, and age-groups) of those immediately affected, it is well-nigh impossible to frame an effective economic policy that will NOT increase the hardship.

Yet, with our irritating PATTERN of rotating convoys of backward MPs, who operate on happenstance, and who care mostly for the party faithful, there is little or no respect for equity or fairness nor fairplay in Saint Lucia. And far less, for the impact of economic policy .

The IMF incessantly repeats itself (Like the Mafia, you take their money, you have to respond to their demands or their terms!) that governments who approach it for assistance, should remove ALL subsidies and privatize services. Check the country reports.

The IMF's euphemism for the resulting hardships by approaching governments are called 'CONDITIONALITIES'. Some governments around the world ... in anticipation ... put some of those conditionalities in place, long BEFORE they go to the IMF, cap in hand for financial help.

What hasn't dawned on our rotating convoys of MPs is that they either, lack the NATIVE intelligence, the necessary knowledge, sincerity or empathy to use compensatory policy measures to reduce the severity of the impacts of government actions on weaker groups, regardless of party affiliation!

We need to remind ourselves: Common sense is NOT common; some only make CLAIMS on it; and shamelessly present baseless 'gut feeling' for that disastrously affect peoples' lives for informed opinion.; September 7, 2012 at 7:13 PM
Anonymous said...: Anon @ 7:13: You have taken a serious detour from the highway of common sense in your post. OK. We agree that good policy requires good, hard data. Micah gave us all the relevant information that we need to assess the impact of this particular policy at the household level. The price per gallon of kerosene has increased by $5.92 for nearly 3000 poor people. These are the "hard numbers". No gut feelings here. Whatever macro-economic benefits are derived from the policy, the fact remains that an increased financial burden (cost) has been placed on 3000 people living in 799 poor households. That's it!; September 7, 2012 at 8:18 PM
Anonymous said...: @September 7, 2012 8:18 PM

The superficial argument that continues to be made here is that it is all well and good to keep those 3000 souls in a situation of poor household lighting.

Someone has a sop for the uneasy conscience that if the subsidy is replaced, those affected are better off. They wash their hands like Pontius Pilate.

That is the level of superficial thinking and backwardness that the political directorate of both the major political parties wallows in.

Nobody cares that the poor standard of living of the people affected have NOT been even addressed. An opportunity for poverty alleviatiation hits them in the middle of their foreheads and still cannot see it for what it is. Hollow speeches are substituted instead.

The arguments made above may be counter-intuitive; yet they are valid ones in economic circles.

Yes indeed. Telling the electorate that the subsidy exists, or has been replaced is solid political manipulation and would make for good politics. However, the level of the crass symbolic political manipulation unfortunately passes unnoticed by the vast majority of a largely unsophisticated and unsuspecting public.

The psychological damage to the occupants of these households, with the children studying by lamp light, attended by their self-esteem being continuously undermined by not being able to feel on par with those with better lit homes, gets short shrift.

Some people do appear to take leave of their senses and substitute instead what they consider to be common sense.; September 7, 2012 at 10:40 PM
Anonymous said...: Has it ever occured to the writer of this article that the reason why the 700 plus households are still using kerosene is because they are the economically worse off than that segemnt of the population that are using gas, has it ever occurred to the writer of this article that his numbers could be in correct because there are households that are using both gas and kerosene for cooking and lumination, why is it the worst economically challenged are being punished to make the rich get richer while the poor gets poorer.; September 8, 2012 at 6:19 AM
Anonymous said...: Anon, @ 8:18PM: Your economics does not mesh with my sociology and sense of humanity. The ideal solution for these 3000 poor people using K-oil to survive, is to institute a targeted plan to rid them of their poverty. Until that plan kicks in and these poor people are able to afford to move to LPG-fired stoves and LUCELEC-lit homes, the answer cannot be to increase their misery by making them pay more to use K-oil. They are not using K-oil because they like it. Removing the subsidy will not make them move to LPG for one simple reason: they cannot afford it. So please put that hard-knock economics of yours aside, and please deal with that reality.; September 8, 2012 at 8:06 AM
Anonymous said...: A subsidy can be a very wicked form of perverse economics.

It can serve ... as the most likely outcome of a re-imposition of the subsidy (which appears to be the argument being made here) ... to RE-INFORCE the deplorable conditions of "the working poor" (those people who work and work to their end of their days on the face of this earth ... and die poor).

Up to now, just one or two persons here have seen it fit to argue for changing the "Quality of Life" or the status quo regarding the working poor affected by the kerosene subsidy.

The subsidy, its retention or its re-instatement does ABSOLUTELY NOTHING to qualitatively uplift those persons from their living condition. Note that this is not even on the agenda here.

It's like saying this: "Once we give you the subsidy, you are free to wallow in your poverty ... until eternity ... for all we care."

That's the kind of caring governments we have had, and continue to support and promote in this country!

Therefore, it is a sop for uneasy consciences to present this thinly-disguised specious argument, that the removal of the subsidy ... in some way ... REPRESENTS A NET TRANSFER OF WEALTH FROM THE POOR TO THE RICH in our economy!

This is pure and unadulterated economic heresy: baseless and unsupported by any economic theory!

Yet, it's typically the brand of INTELLECTUALLY DISHONEST arguments offered ... either by the mis-educated, the ill-educated, the un-educated or the under-educated. For some of our worshipped media talk-show hosts ... it's "All of the above".; September 8, 2012 at 9:30 AM
Anonymous said...: If Dr. Raymond was still around he would have put some sense in the heads of Kenny and his internal clicks, although he would have been hated more for it because the truth usually offends. Kenny get some advice from Dr. Raymond (the one that you sidelined and frustrated) because your current economic advisor (if there is one) is making you look really bad.; September 8, 2012 at 6:55 PM
Anonymous said...: Perhaps, Kenny is just like Compton. He does NOT like smarter people than himself to have a say when he is making decisions. He will feel a sense of inferiority complex.

Half of the time, I believe Dr. Raymond would be teaching him, or giving him the classic tutorial lecture on this or that. Maybe, ego is getting into the way.; September 9, 2012 at 5:18 AM
Anonymous said...: Kenny is making sure the Flambeau does not stay a light so he is taking his subsidy lol. Mica i will not comment on your competence because your articles are sordid examples as to why we are in this mess.; September 9, 2012 at 12:54 PM
Anonymous said...: Screw the poor. I am in total agreement with kenny. Its a doggy dog world and the poor has nothing to offer so take whatever they have and give to the rich. Lets see those same poor bastards stand in the streets chanting ENROUGE like some buffoons who were let off leashes.; September 9, 2012 at 1:05 PM
Anonymous said...: Tis so true...Dr. Raymond could have provided Kenny with the economic advice needed to advance the country. But the man is so filled up with his ego coupled with the support of an inept internal click. I labored hard for SLP but not again. My entire family have voted SLP from its inception but will follow Dr. Raymond wherever he goes, that is, if he wants to still be in politics. Word on the ground is that Kenny's internal click is asking "who the hell is Ubaldus Raymond and his wife?" This has brought painful shock waves to supporters who appreciated the work provided to the party by both Doctors. This is really sad, and SLP simply can't win another election with Kenny and his internal click.

Concerned SLP voter; September 9, 2012 at 6:00 PM
Anonymous said...: All leaders have cliques (the word is clique) good, bad and indifferent. Therefore, there will always be those in th inner circle of the leader or the boss, who will be favoured (gifts, positions, promotions, nice performance reports, etc).

Then there will be those on the outside, who will always get the short end of the stick.

Anyway, Dr. Raymond is not the only star in the heavens, nor is he the sharpest tool in the economics tool shed in Saint Lucia. So it is time to get over it.

There may be nothing more than personality and ego clashes. Those two male crabs may not be able to live in the same hole.

If the rank and file members of the SLP see nothing wrong with Dr. Anthony, they will go on and tinkle with the SLP constitution even more. Only this time, they may even make him leader for all eternity! It may have to take a little child to point out to them that the Emperor has no clothes!; September 9, 2012 at 6:23 PM

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Thursday, September 6, 2012

The Kerosene Subsidy Removal

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