The cost of the barrel of petroleum is almost at the US$26 level it was when the government increased the price of fuel sold locally to RD$32 in December 1996. At the time, the government said the price of fuel would fluctuate with international prices. It did eventually lower the price of unleaded fuel to RD$27.90, but prices stayed the same when the cost of the barrel of petroleum plummeted to lows of US$10 in subsequent months. The decline in petroleum prices was a windfall in resources for the Dominican government. Likewise, the recent international petroleum price increase has affected the income received by the government from the petroleum differential, the excise tax determined by the government. The monies received from the petroleum differential are retained for payment of the foreign debt on the instructions of President Fernández. Now the government says that the hike in the cost of petroleum could mean the government will see its income decline to barely US$1,000 million next year, down from a peak of US$6,000 million in 1998. Consumption of petroleum is considerably up from 17.8 million barrels in 1996 to 30 million in 1999. The government would like to increase fuel prices, but recently Secretary of the Presidency Alejandrina Germán said that fuel prices would not go up for now. Several business sectors have justified an increase in the price of fuel, albeit the government need to use other resources and the decline in government reserves bring about an increase in interest rates. But others feel it is not fair the government increase the price of fuel when it didn’t decrease it when it dropped. At the crux of the issue is that the DR is entering into an electoral period.
