NASSAU, Bahamas — Rising international crude oil prices could hinder recovery in the tourism sector, but factors related to the rising costs could bring some benefits as well, according to former Bahamas Minister of Finance James Smith.
“We were afraid this was going to happen,” Smith told the Nassau Guardian on Tuesday. “Everything is affected by the oil prices and it certainly could have a dampening effect on the recovery of the tourism industry. But on the other hand, if the unrest continues, the chances are it could cut down travel [outside the region]. We just have to watch and see.”
Smith’s comments come after crude oil prices soared over the weekend and increased 6 percent on Tuesday, reaching as high as $98 per barrel according to CNN. The recent surge is related to the civil unrest in Libya, which some observers fear could spread to other oil-producing countries.
“Consumers will take a hit from this,” Smith said. “But this could work out in our favour because if cruise prices and airfare prices go up, then our tourist base — which is primarily visitors from the US — would be more inclined to travel closer to home and we could see an uptick from that.”
Managing Director of Freeport Oil Holdings Company Limited (FOCOL) Anthony Robinson declined to predict what impact the rising prices will have on Bahamians.
“I have no idea where this is heading and we just have to see what happens,” Robinson told the Guardian.
Meanwhile, in Jamaica, lecturer in finance at the University of Technology, Dr Andrew Sutherland, said inflation is expected to soar as a result of the increase in violence in Egypt and Libya.
In addition to higher energy prices, Jamaica’s visitor arrivals as well as remittances into the country could also be impacted, Sutherland said.