(A Repeat With Addendum)
By Atty Philip N. Wesseh (PNW)
Today, in the wake of the shortage of gasoline on the Liberian market, I want to explain why the product is considered a “PERVASIVE COMMODITY.” Over the years, this country has intermittently experienced gasoline shortage, but what is obtaining now is unprecedented because of the level of the shortage, coupled with inconsistent statements from some operatives of government on the matter as to the availability or inaccessibility of the product on the market.
Undeniably, the issue of gasoline is such that whenever there is a shortage, especially so when it gives rise to “BLACK MARKET,” leading to hike in its price, it affects other commodities on the local market. It is for this reason, it is referred to as a “pervasive commodity.”
Conversely, if there is a deduction in the retail price of the commodity, there would also be as corresponding reduction in other prices that went up because of the increase in the commodity’s price.
The adjective, “PERVASIVE” which comes from the Verb, “PERVADE” means something “existing in or spreading through every part of something.” The synonyms of the word are diffuse, penetrate and permeate.
As the definition of the word says, one should expect that whenever there is a shortage of the commodity, one should expect an unauthorized price, mainly on the black market, as it is being experienced by Liberians these few days.
In economics, when one speaks of black market, it refers to “an illegal traffic or trade in officially controlled or scarce commodities.”
In addition, “a Black Market is a sector of the economy where transactions occur without the knowledge of the government and usually involves the breaking of certain laws.”
For instance, in the wake of the gasoline shortage, the government tries to have some control by removing those referred to in the streets as “CAN BOYS.” This has now led to hike in the commodity, principally, as we say in economics, as demand is more than supply, in the wake of this shortage.
Nauseatingly, while going to press, it was gathered that a gallon of gasoline being sold officially for less than LD 700, is being sold on the black market for LD2, 500 to LD 3,000.
Incontestably, this astronomical hike would continue until there is assurance that the situation has improved and that is in few days.
On the issue at bar, gasoline is referred to as “pervasive commodity” because whenever its price increases, this would definitely affect other commodities as well as the “purchasing power” of the people.
Let us take for example in the case of a marketer who paid astronomical fare to transport goods to a certain destination, that marketer would obviously pass that increase to the consumers. This can even be likened to the issue of taxes imposed on certain commodities by the government.
In keeping with profit maximization by business people, in the case of “TAX INCIDENCE,” the business persons may pass certain percentage of the tax or share it with the consumers. This is why a basic question on this ASKS: “WHO BEARS THE TAX?
We are told in economics that Tax incidence (or incidence of tax) is an economic term for understanding the division of a tax burden between stakeholders, such as buyers and sellers or producers and consumers.
However, the difference between Black Market and Tax Incidence is that tax incidence is done legally, while black market is illegal.
Regarding purchasing power; let us assume that a parent was spending one thousand Liberia dollar a week for a child’s transport and now because of the arbitrary increase in fares, the parent is now to spend LD 3,000 a week. This additional LD 2,000 would affect the purchasing power of the parent because this amount was never budgeted for.
Likewise, if the parent had been providing one hundred Liberian dollars for the child’s lunch, popularly known as “recess;” because of the hike in food because of the gasoline crisis, the parent would be constrained to increase the lunch of the child.
Still on purchasing power; it is said that “consumers lose purchasing power when prices increase and gain purchasing power when prices decrease,” therefore, in this present situation of price hike owing to the gasoline shortage, consumers’ purchasing power is decreasing.
Frankly, this is what happens when there is a gasoline shortage which would normally lead to unnecessary price hike of many goods because of the pervasiveness of the commodity.
The issue of gasoline is not something of “substitute goods,” as one cannot use fuel or water to substitute for gasoline in a gasoline vehicle. It goes the same way that if there is no fuel or diesel, one cannot use gasoline in a diesel car.
As it is said in economics, “Substitute Goods” are two alternative goods that could be used for the same purpose.”
So you see, in the case of substitute goods, there is always an “alternative.” Even our staple food, rice, if there is a shortage, the consumer can resort to other edible goods like eddoes, potatoes or cassava, etc.
Hence, because of the pervasive nature of gasoline, the government should take note from the prevailing situation to avoid a recurrence of this ugly situation. Let the government be PROACTIVE, instead of waiting when the damage has already been done.
As I close, let me thank TOTAL for providing some relief on this situation.
Thankfully, as I was updating this piece yesterday, I heard that the Minister of Information, Lenn Eugene Nagbe, my college mate, assured that some of the products are expected in country this weekend. Obviously, if it happens, the situation would improve.
I Rest My Case!!!
NB: Atty Wesseh did his major in MASS COMMUNICATION and minor in ECONOMIICS from the University of Liberia.