Biz community seeks bigger cushion from oil price shocks, inflation ease

Despite two successive moves to stabilise domestic fuel prices amid huge world oil price spikes, two industry leaders have warned of intensifying inflation unless even more coordinated measures are taken.

Industry leaders from the Alliance Owners of Public Transport (AOPT) and the Barbados Private Sector Association (BPSA) are now seeking structural adjustments and strategic state collaboration.

Roy Raphael, chairman of the Alliance Owners of Public Transport, expressed concern that the dramatic rise in fuel spending has forced operators to absorb heavy daily operational losses without the ability to adjust their fares.

“Obviously it will have a significant impact on us as related to the transportation sector because our sector consumes a large quantity of diesel and gasoline,” he said. “When oil prices go up, it means that we as a group have to look for more income—more money to pay for fuel.”

But attempting to raise fares in an already challenging economic period is neither feasible nor fair to the travelling public, Raphael acknowledged. 

“We cannot raise bus fares. It will not have an immediate impact on the travelling public because fares are regulated by the government. Even if we wanted to ask the government for assistance to stabilise what we are doing, we realise the public is already facing tough times. The government will have to meet us halfway by providing some kind of subsidy to encourage the sector to continue.”

Compounding these cost pressures is a sustained drop in passenger numbers across the public transport network, which has steadily eroded profit margins. At the same time, severe traffic congestion on major thoroughfares forces vehicles to spend extended periods idling, consuming high-priced fuel without generating revenue.

“We have seen over the years a decline in the number of passengers travelling on public transport, and to us, it is a really great concern,” Raphael continued. “If we have fewer people travelling on our buses and the cost of fuel goes up due to global market prices, we have no choice but to make suggestions to the government regarding subventions or subsidies.”

To alleviate engine strain and fuel consumption caused by heavy congestion and idling, the AOPT is proposing structural traffic adjustments, including dedicated transit lanes for public service vehicles and emergency services on major highways to improve journey times and fuel efficiency.

“We will be making recommendations to the government regarding dedicated emergency and transit lanes. If we want to meet international standards, we have to adopt international practices. Allowing public service vehicles and emergency services a clear lane will improve efficiency and help offset some of these mounting operational costs.”

While the transport industry struggles with rising pump prices, the broader private sector is preparing for far-reaching knock-on effects. James Clarke, chairman of the Barbados Private Sector Association, said the global nature of current oil dynamics means virtually every commercial area will face elevated input costs and freight surcharges.

Clarke said: “The issue, remember this is a global thing and because we are in a globally connected world, goods come from all different places. Even if not the final goods, sometimes the raw materials come from somewhere which may be thousands of miles away from us.”

He noted oil benchmarks have experienced sharp fluctuations, rising from around $65 per barrel early in the year to peaks of $120 before settling into higher trading ranges. He warned that ongoing maritime instability along vital transit points — such as the Strait of Hormuz, the Red Sea and the Suez Canal — is forcing global shipping lines to take longer, more expensive routes around South Africa.

“When the oil prices go up or the availability of oil is not the same, you can have production issues. Shipping costs are going to increase because if shipping lanes are saying they are not sending vessels through those waterways, it means they have to go a more circuitous route around South Africa. That takes longer, costs more in fuel, and requires higher operational expenditure. Therefore, that has a knock-on impact on food products and imported goods.”

The impact extends beyond consumer retail to agriculture and tourism. Rising fuel costs amid shrinking supply directly affect fertiliser manufacturing, threatening global crop yields and driving up food import bills. Sharp rises in jet fuel prices risk pushing up international airfares, which could weigh on tourism arrivals.

“Jet fuel early in 2026 was around $100 a barrel, went up as high as $220 in April, and remains significantly higher than at the start of the year,” Clarke said. “The impact this can have, of course, is higher costs of airfare, which airlines pass on to customers, and that may have an impact on the tourism industry. The net effect of all of this is higher prices all around.”

In response to these systemic threats, business leaders are urging a dual approach focused on immediate cost containment and accelerated long-term energy independence. 

The BPSA’s Clarke stressed the need to advance renewable energy projects, encourage household and commercial energy conservation, and re-evaluate sourcing strategies.

“This is a good time for us to really focus on what we can do here and with our close neighbours to try to shield us from the impacts of rising oil prices. We need to get our renewables on stream as quickly as possible, focus on energy efficiency, and control the things we can control.”

(RR)