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Santo Domingo.- The government says that the increases in fuel prices represents “a real problem” for the Dominican Republic, and that this is exacerbated by the fact that there are no medium-term contingency plans to deal with the situation.
Speaking yesterday, treasury minister Vicente Bengoa said that the only alternative was to buy all fuel from Venezuela, making the most of the PetroCaribe agreement in which Venezuela sells oil to a number of countries in the region under preferential terms.
The minister did not mention, however, that PetroCaribe is limited to a daily quota of 50,000 barriles, while the Dominican Republic consumes around 160,000 per day. This means that if all the country's fuel needs were to be met by sales from Venezuela, 110,000 barrels would be outside the terms of the accord.
Meanwhile, Dominican vice president Rafael Alburquerque said that the government would be discussing the problem of high fuel prices at a cabinet meeting.
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The Iraq war policy has added over $40 per barrel and was largely influenced by Cheney the Vice President who is the CEO of Haliburton, you guessed it, an oil company.
The DR indeed has Bush to thank for this problem.
The DR does have the potential to be energy independent as is Brazil.
High oil prices require an increase in interest rates in order
to protect the integrity of the peso.
Without a strong peso, nothing can improve in the DR.
The DR has to bring out all of the stops regarding becoming energy independent, while protecting what is left of the peso.
The peso must be protected at all costs.
This is done by creating a hedge against oil price increases.
This program can be easily attained through a firm such as Goldman Sachs, and needs to be supervised by the Central Bank.
During the duration of this hedge program, the DR can work on becoming energy independent.