The spike in oil prices over the past three weeks is threatening to put even greater pressure on the Dominican economy. The oil invoice for last year grew by 17.8%, reaching US$1.667 billion, in spite of a 10.3% drop in imports. Another way of saying this is to point out that the oil bills for 2004 represented the highest proportion of the GDP since 1984, paying an average price of US$39.60 per barrel. In 1984 the Dominican Republic paid 12.2% of the GDP for oil and petroleum based products. In 2004, the country paid 9.3% of the GDP.
If the Goldman-Sacks prediction of a continuing price spiral for crude, a spiral that they are saying might even reach US$105 a barrel, comes to fruition, Dominicans will be extremely hard hit by higher costs.
Even now, the Ministry of Industry and Commerce has been obliged to increase gasoline and diesel prices over the past seven weeks, reaching levels that were last seen in August of 2004.
To further complicate things, the government is obliged, by the IMF agreements, to further reduce the subsidy that is paid for propane gas (LPG), and focus the subsidy on just a half a million of the poorest families, which will exclude the transport sector and the middle class.