EDITORIAL: The War Is Abroad. The Gouging Is at Home

Liberia cannot control global oil prices. It can stop traders from using the Middle East crisis as cover to overcharge the poor.

NO ONE IN Monrovia controls the price of crude oil. The conflict involving Iran, Israel and the United States has pushed global oil prices above US$100 a barrel and disrupted shipping and energy markets worldwide. Few countries feel the shock more directly than Liberia, the West African nation of about five million people. It refines none of its own fuel, holds no strategic petroleum reserves and has little room to cushion a price spike that starts thousands of miles away.

WE ACCEPT THAT. Fuel prices were always going to rise this year. In April the government raised the retail ceiling price of gasoline from US$4.02 to US$5.09 a gallon, an increase of about 27 percent. That reflected a real global emergency.

BUT MUCH OF what Liberians now pay has nothing to do with the war. The extra cost is added after the fuel lands at the Freeport of Monrovia. That is where two state bodies must act: the Ministry of Commerce and Industry, which sets the official price ceilings, and the state-owned Liberia Petroleum Refining Company (LPRC), which imports and stores the country’s fuel.

THE OFFICIAL CEILING is largely a Monrovia number. Senator Amara Konneh is a former finance minister who now chairs the Senate’s Public Accounts and Audit Committee. He told lawmakers this month that a gallon of fuel in Gbarpolu, the forested county he represents in north-western Liberia, sells for L$1,500, about US$8.60. That is roughly 70 percent above the government’s own ceiling. It is also more than drivers pay in neighbouring Sierra Leone, which has the third most expensive petrol in Africa, according to GlobalPetrolPrices data. In Gbarpolu, the senator said, a bag of cement costs US$15 against US$8 in the capital, and a 25kg bag of rice, the national staple, costs US$22 against US$17.

NO MISSILE STRIKE in the Gulf explains a gap that size between Monrovia and Bopolu, Gbarpolu’s county seat. Poor roads and transport costs explain part of it. Weak enforcement, and traders who know no inspector is coming, explain the rest.

WHEN FUEL PRICES rise, other prices follow. The taxi driver raises his fare, the truck owner raises his haulage rate and the shopkeeper raises the price of rice. The cost falls hardest on market traders, subsistence farmers, motorcycle-taxi riders and families saving to replace a mud house with a brick one. Liberia is one of the world’s poorest countries, and these households have no savings to absorb the shock and nowhere to complain.

THE GOVERNMENT’S ECONOMIC team deserves credit for restoring stability. Inflation is 4.6 percent, growth is projected above five percent, and the Liberian dollar has strengthened against the US dollar. But a stronger currency only helps if it lowers prices. Fuel prices are set in US dollars and converted into Liberian dollars at an official rate. If the Liberian dollar strengthens and the pump price in local currency does not fall, the gain goes to importers and retailers rather than the public.

THIS HAS ALREADY happened. A Senate committee report this year found that Liberians were overcharged by as much as L$131 million, about US$700,000, because the exchange rate used to calculate pump prices did not follow the Central Bank of Liberia’s movements. The report noted that nothing in the pricing formula required the Commerce Ministry or the LPRC to adjust when the rate changed. The refund, rebate or tax relief the committee recommended has yet to appear.

THE COMMERCE MINISTRY’S own price circulars warn that “hoarding, undercutting, or arbitrary price increases will not be tolerated.” Liberians now need to see those words enforced. We urge the Ministry and the LPRC to take seven steps.

FIRST, PASS ON exchange-rate gains promptly. The Liberian-dollar pump price should change whenever the Central Bank rate moves significantly, not wait for a monthly circular.

SECOND, PUBLISH COUNTY-LEVEL ceilings. Each of Liberia’s 15 counties should have a ceiling price that includes a transparent, fixed allowance for transport inland. Retailers should no longer be able to use distance to justify any markup they choose.

THIRD, DEPLOY INSPECTORS beyond the capital. Send them to Gbarpolu, Grand Cape Mount, Bomi and the south-east, where overcharging is worst and enforcement weakest.

FOURTH, NAME AND penalise violators. Publish the names of filling stations and wholesalers caught overcharging, and suspend the licences of repeat offenders.

FIFTH, OPEN A public price hotline. Citizens should be able to report overcharging and see what action follows.

SIXTH, MONITOR ESSENTIAL goods. Track the prices of rice and cement alongside fuel, since fuel is routinely used to justify every other increase.

SEVENTH, ACT ON the Senate’s findings. Return the money through a rebate, a temporary cut in the goods and services tax on fuel, or a credit in the next pricing cycle, as the committee proposed.

REGULATION ALONE WILL not end Liberia’s exposure to global shocks. That requires better roads, more storage capacity and serious planning for a strategic fuel reserve, so that the next crisis abroad does not become a crisis at home. Those are long-term tasks. Enforcing the price ceiling can start this week.

THE GOVERNMENT CANNOT end the war in the Middle East. It can make sure that no Liberian pays more for fuel, rice or cement than the war actually justifies. Liberians should not pay extra for weak enforcement