Pago Pago, AMERICAN SAMOA — A Fuel Impact Assessment report conducted by the Morris Scanlan Service Inc., for the American Samoa Chamber of Commerce shows a loss in revenues for a majority of gas stations due to natural disasters and local COVID-19 restrictions placed on businesses — including gas stations.

The “assessment illuminates current and future impacts of the inevitable increase in fuel prices on the fuel industry, government conversion to clean energy, and increasing local demand for gasoline. The global shift in the fuel market will not affect us immediately, but we should be prepared,” according to a copy of the assessment report shared with Samoa News by a Chamber member.

It notes that when COVID-19 hit in March 2020, fuel prices dropped when there was no demand. Fossil fuel become the core reason for many economic issues and exposed American Samoa’s reliance on imports. To save the oil industry, major oil production cuts were required.

It also says that President Biden’s Administration reestablishing the United States agreement with the Paris Agreement has oil investors around the world looking to start investing in green, renewable energy.

“Understanding how to stimulate innovation in energy technology is therefore of growing importance,” it says.

“On the other hand, more practical folks like ASPA, have bought quick start generators to facilitate the continuation of energy from the plants when the solar green technology becomes unreliable when the sun sets, rain clouds set in and even when windmills cease to produce as wind ceases,” the report pointed out.

In summary, the report said:

•           The recent rise in oil prices, when demand outstrips supply, has caused higher prices in shipping, food products, and utilities;

•           Minimum wage increase of 40-cents per hour, in September 2020, require local prices will spike to cover payroll.

•           Private sector needs to work together with American Samoa Government.

On the issue or rising gas prices, the report, said the COVID-19 pandemic was an unexpected occurrence, but it was not the only natural disaster that caused an economic loss in American Samoa.

For example, in November 2019, Upolu island in Samoa experienced a Measles outbreak which caused everyone to panic and schools to close. And this continued into January 2020 when four tropical storms and cyclones brushed past American Samoa.

Then the global COVID-19 outbreak began in early 2020 and by March, the territorial government imposed COVID-19 restrictions, which included enforcement of business operation hours, reduced down to 6am – 6pm.

“For gas stations specifically, this was a recipe for disaster as many people started to avoid going out. The culmination of these natural disasters and restrictions led to an average 20% loss for majority of gas stations,” the report says.

“Gas stations suffered during the restrictions. Gas stations are normally a 24-hour, 7-day per week business, but the government’s restrictions cut operational hours in half. To cover costs, gas stations had to increase gross margins at the pumps by five cents. Gas station owners were then accused of price gouging,” it says.

According to the report, COVID-19 is not the only contributing factor to the local gas price increase. On Sept. 30, 2021, American Samoa is expected to increase the minimum wage by 40-cents.

“The increase will affect the minimum wage employees and all employers across the board. Gas station owners will have to adjust their gross margin to cover costs. The margin will increase from .65 cents to about .90 cents by September 2021, reflecting the increased minimum wage, increased cost of shipping, and increased operational cost,” it says.

The report also made a request to ASG for “Gas Stations to be considered essential businesses. Emergency Action Plans have been prepared to handle situations such as hurricanes and tsunamis.”

In conclusion, the assessment said, a “solution to COVID-19 is needed to change the current course of the world’s economy. The economy needs to recover and we will start seeing the impact by the end of 2021. The time to prepare is now to avoid mass shortages and closure of many local businesses.”

“ASG should coordinate with the private sector and include their voice on major decisions which will help create a transparent and inclusive relationship with the people of American Samoa,” it says.

Click on attahment to download full details of the assessment report, including a global view.