Diesel now wears the crown at the pump, and that is why everything costs more

By Horace Palacio:

Stand at any Shell pump in Belize this week and read the three little windows.

Regular, 14.15 a gallon. Premium, around 14.77. And diesel, 14.99.

Most drivers glance, groan, and fill up. But look again at that board, because it contains a detail that explains your grocery bill better than any economist. Diesel, the working fuel, now wears the crown as the most expensive fuel in Belize. And when diesel leads the board, inflation leads the country.

Today, let us take one gallon apart, piece by piece, so every Belizean understands exactly what they are paying for, who takes what, and why this pump has become the printing press of Belizean inflation.

Start with the part nobody in Belmopan controls. The world price. Since the war between the United States, Israel and Iran erupted this year, global oil has soared, and the receipts landed here fast. The Financial Secretary’s own figures tell the story. In January, a gallon of regular gasoline cost Belize 4.62 dollars to land at our ports. By May, 9.39. Diesel climbed from 5.44 to over 10 dollars landed. Read that again. Before one cent of Belizean tax touches it, the raw cost of bringing fuel here more than doubled in five months, because of missiles flying twelve thousand kilometers away. A war we did not start, cannot influence, and cannot end, now sets the most important price in Belize.

Next, the tax stack, and let us be precisely fair here because this column deals in whole truths. Government piles several charges on each gallon, import duty, a fixed per-gallon excise, an environmental tax, and GST. For years those taxes made our pump prices the heaviest in Central America. But when the war spike hit, government did cut, regular’s taxes fell from 4.80 to 3.81 per gallon, diesel’s from 4.39 to 3.23, and the Prime Minister says the treasury has forgone roughly 80 million dollars cushioning the blow. That is real money, and honesty requires saying so. Add the importer and dealer margins on top, and there is your 14.15, assembled, the world’s war, the government’s stack, the trade’s cut.

Now the comparison that stings. In May, while Belizeans paid over 15 dollars, Guatemalans paid about 10.90 for the same fuel from the same planet. Hondurans, 10.14. Panama, 9.54. El Salvador, under nine. The oil is identical. The difference is everything stacked on it locally. And western Belizeans need no lecture on this, they already vote with their tanks in Melchor, the same border arithmetic I wrote about with the school uniforms, now playing out at the fuel nozzle.

But here is the heart of today’s column, the reason that 14.99 diesel price is not just a driver’s problem but every Belizean’s problem, including those who have never owned a vehicle.

Diesel is the bloodstream of this economy. The truck that hauls your rice from the port runs on it. The bus your children ride runs on it. The fishing boat, the farmer’s tractor, the backhoe, the delivery van, the generator behind the supermarket, all diesel. And as I wrote last week, when our own power runs short, BEL’s gas turbines burn fuel to keep your lights on, which is part of why that new adjustment line appeared on your electricity bill. So understand this clearly. You do not buy diesel only at the pump. You buy it inside every tomato, every pound of fish, every bus fare, every light bill, every block of cement. When diesel becomes the most expensive fuel in the country, every one of those prices gets a push. Our inflation is 90 percent imported, and diesel is the vehicle most of it rides in on.

So why not simply slash the fuel taxes to zero and free the people? Here is the honest answer, and it has two parts.

Part one, the money has to come from somewhere. I showed you the government’s budget anatomy recently, 60 cents of every dollar goes to salaries and pensions, another 10 to labour costs, leaving 30 cents for everything else. Fuel taxes are a pillar under that 30 cents. Cut them to nothing and you are not cutting fat, you are cutting the materials money, the medicines, the road repairs, the very things Belizeans demand more of. Eighty million has already been surrendered. Every further cut is a clinic’s supplies somewhere.

Part two is subtler and more important, and it concerns our dollar. Fuel is bought in US dollars. When pump prices are held artificially low, Belizeans keep consuming at high volumes while each imported gallon costs double in foreign exchange. That means US dollars draining out of the country faster, at the worst possible time, pressuring the reserves that stand behind our two-to-one peg. Cheap fuel at the pump can become expensive money for the nation. A small country defending a currency peg cannot subsidize its way through a global oil war. It can only manage, cushion, and adapt.

The politics, briefly and fairly. The Opposition Leader cries, when is enough, enough, and she is voicing the genuine anguish of taxi men, single mothers, and farmers. The Prime Minister answers that taxes were cut and Belizeans are now essentially paying the world’s acquisition cost, and his arithmetic is sound. Both are telling the truth. And neither of them commands Tehran or Washington. The shouting match at home cannot move a price set abroad.

So what can actually be done? Five things.

Publish the anatomy. Every month, government should release the full build-up of each fuel price, landed cost, each tax, each margin, every cent, in plain language on one page. Belizeans who understand a price argue better and panic less. Sunlight, as always, first.

Target the relief. A blanket tax cut sprays scarce money at every pump, including the luxury SUV’s. Smarter is aiming relief where it cuts the inflation chain, the bus operators, the farmers, the fishers, the food transporters. A dollar of relief on the diesel that moves food lowers more prices than a dollar spread thin everywhere.

Buy brilliantly. Belize purchases fuel shipment by shipment at the world’s mercy. Strengthen procurement, storage, and timing so we buy more when prices dip and less at the peaks. Small nations cannot set prices, but they can shop wisely.

Burn less. Every efficient vehicle, every consolidated trip, every government fleet standard, every conserved kilowatt is fuel not imported and US dollars not exported.

And escape structurally. This is the thread through my whole energy series. Every solar panel serving the daytime load, every megawatt of Belizean generation, every efficiency gain is a permanent step off this pump. The war made the case louder than I ever could. A nation that cannot control the price of fuel must engineer its need for less of it.

Here is the whole column in one breath, Belize.

A distant war doubled the cost of the fuel that carries everything we eat, wear, and switch on. Government has cushioned what its thin purse allows. The shouting will not lower the price, because the price is not set here.

But the dependence is set here. And dependence, unlike war, is something Belize can actually end.

We cannot stop the missiles. We can stop needing their permission to eat affordably.

That work starts now, or the next war finds us standing at this same pump, reading worse numbers, having learned nothing.

The views expressed in this article are those of the author, Horace Palacio, and do not necessarily reflect the views or editorial stance of Breaking Belize News.

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