GAS PRICES REACH $6.66 A GALLON IN TAHITI

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PAPEÉTE, Tahiti (Tahitipresse, July 3) - French Polynesia motorists began paying 10 percent more for unleaded gasoline and 12 percent more for diesel fuel less than 24 hours after the Temaru government announced the July 1 price hikes Friday afternoon.

This was the second price hike at all service stations throughout French Polynesia this year and the third increase since last September.

The short notice of the price hikes came under strong criticism from the biggest opposition political party, led by former French Polynesia President Gaston Flosse.

French Polynesia Vice President/Finance Minister Jacqui Drollet announced on Friday afternoon that beginning Saturday morning the price of unleaded gasoline would increase 15 French Pacific francs from 145 to 160 French Pacific francs per liter. That's an increase of nearly 16.5 US cents, raising the pump price from US$1.59 per liter to US$1.76 per liter.

The price of diesel fuel increased 14 French Pacific francs on Saturday from 121 French Pacific francs per liter to 135 French Pacific francs per liter. That's an increase of 15 US cents, raising the pump price from US$1.33 per liter to US$1.48 per liter.

Converted to US gallons, the price of gasoline has increased from US$6.02 per gallon to US$6.66 per gallon, while the price of diesel has gone up from US$5.03 per gallon to US$5.60 per gallon.

Tahiti's new gasoline price of $6.66 per gallon compares with an average price of $2.87 per gallon nationwide in the U.S. Tahiti's new diesel price of $5.60 per gallon compares with an average price of $2.87 per gallon nationwide in the U.S. The price of gasoline in the U.S. is up 65 cents from a year ago, while the price of diesel is up 53 cents, according to a U.S. government Internet website.

The price of gasoline in Tahiti has increased 32 French Pacific francs (35 US cents) since last September, while the price of diesel has gone up 36 French Pacific francs (40 US cents).

Drollet said the new pump prices reflected the continued increase in the price of a barrel of oil and the realization that the government is running out of funds used to regulate to price of fuel.

In the U.S. on Friday, crude oil futures briefly surpassed $74 a barrel on strong U.S. gasoline demand ahead of the Independence Day holiday. After rising as high as $74.15 a barrel, light sweet crude for August settled at $73.93, an increase of 41 US cents on the New York mercantile Exchange, an Associated Press article on the Forbes magazine Internet website reported Friday.

Professionals in French Polynesia, such as those in the public ground transportation, inter-island cargo ship, fishing and bakery sectors will be exempt from Saturday's fuel price increases, Drollet said. That means, he said, they will continue paying the same prices as before.

Flosse's opposition party immediately issued a communiqué criticizing the short advance notice of the price hikes at the service stations operated by French Polynesia's three oil companies. Mobil, Shell and Total all charge the same fuel prices at their service stations because only the government can set prices, and once they are set no competition between companies is allowed at the pump.

The main opposition party's communiqué noted the "very difficult" economic times faced by average households in French Polynesia as a result of the Temaru government's recent round of new taxes and a general increase in prices.

"Despite the constant and rapid rise in the price of oil for the past two years, the government has not given any overall thought to limiting the negative effects on the consumer," the communiqué stated.

Flosse's party insisted there are other ways, noting that when President Oscar Temaru's political independence party was in the opposition it called for a reduction of fuel taxes, which represent more than 70 percent of the price of gasoline at the pump, the communiqué claimed. "Why doesn't the (Temaru) government want to apply this solution?"

Drollet, however, told the news media Friday afternoon that the government had decided to cut the government's tax on gasoline by 20 percent. But while this will create fewer funds for the government to use to offset higher prices at the pump, the 20 percent tax cut will not lower the price at the pump this time around, Drollet said.

He also announced that the government has begun an attempt to hedge the cost of transporting gasoline, diesel and other fuels from Singapore to Tahiti. The goal is to fix a shipping price of between $41-$48.5 for an initial period of five years.

Drollet was optimistic about negotiations between the government and Electricité de Tahiti (EDT), which, along with other electricity companies, account for two-thirds of the government's funds to regulate fuel prices. That cost currently amounts to 3.4 billion French Pacific francs (US$37.4 million).

Finally, Drollet said the government wants to promote the use of alternative energies. For example, he said hydroelectric energy from the island of Tahiti's rivers now produces 160 million kilowatt hours, which represents 27.5 percent of the total 581 million kilowatt hours needed.

In the outer islands, the first energy produced from a combination of diesel fuel and windmill energy will be put into operation soon on the Tuamotu atoll of Makemo with the EDT as a partner in the project.

The government hopes to eventually offset some of the use of hydrocarbons to produce electrical energy with the research and development possibilities for renewable energies, Drollet said.

July 4, 2006

Tahitipresse: www.tahitipresse.pf

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