Dear Editor

2/25/2008

Dear Editor,

Recently, there has been discussion within Akwesasne to confront high gasoline prices by means of a discount or rebate. Given the rising cost of filling up your gas tank, the relief would seem to many, overdue.

When listening to the earnest arguments presented in favor of dramatic price-per-gallon reduction in prices, a compelling case is likely made. There is however, another perspective.

The breakdown of the cost of a gallon of gas available in Akwesasne Mohawk Territory relies upon tracking the world economy. The weakness of the American dollar at the present time will not go away soon. In contrast the inflation of the Canadian currency also seems likely here to stay for some period of time. Thus, the strength of the Canadian economy is having an effect here that cannot be dismissed.

One might ask, what does the strength of the Canadian dollar have to do with the price of gas in Akwesasne? The gasoline sold in Akwesasne is acquired in Canada. Therefore, this forces Akwesasne retailers to deal with an exchange rate that is now at par. While some quick analysis would point to the switching to American suppliers for maximum benefit to pump prices, that change must be carefully considered. If a future fluctuation were to occur, again reversing the market supply side would be a difficult position to advance. At the bottom line, the current savings seen at the gas pumps in Akwesasne might be difficult to maintain, due to wholesale supplier issues. Brand loyalty has served Akwesasne well in the past, but the cost of doing business this way also breeds a limitation of future suppliers in America. Furthermore, gasoline may not be purchased from New York State terminals without New York State taxes applied. This would result in pump prices at or above off-territory prices due to the exorbitant price of electricity on the territory and the labor costs of full-service that are currently enjoyed by customers. Therefore, out-of-state terminals are the only option to obtain “tax-free” gas and transportation costs prohibit this action to be price-advantageous.

The profits of Akwesasne gasoline retailers is derived mostly from volume of sales versus actual sales price. Any loss of sales volume directly affects the profit and loss threshold. The lowering of price-per-gallon for so large a segment of customers that Akwesasne residents comprise would have an effect across the entire Territory. The impact could be so great that marginal performing gasoline retail outlets within Akwesasne might be forced to close their doors altogether, or at least face the loss of offering gasoline for sale to anyone, Akwesasne resident or otherwise.

Additionally, community resources that would be lost include loss of funding of current Tribal programs reliant upon gasoline fees collected by the Tribe, the loss of charitable contributions by gasoline retailers available to worthy community organizations and individual causes alike, as well as the loss of jobs within Akwesasne, including those employed from surrounding outside communities. These losses add up to a decrease in the quality of life within Akwesasne itself. Rising unemployment rates often lead to increases in crime rates. Also, the ability to effectively maintain a tax-immune sovereign community may be lost without the fees contributed by gasoline and tobacco retailers to the anti-tax fight, in whatever form that struggle takes.

Although prices have been set at rates that promote retail gasoline sales to Akwesasne resident and visitor alike, the price parity system has allowed Akwesasne gasoline retailers to stay in business without invoking price undercutting that only captures the interest of promotion. A business that fails to make some level of profit will soon price themselves out of existence. The weather, low population density, as well as remote location of the North Country all contribute to the all-important need to maintain a high volume of retail customers who visit and shop within the Akwesasne Mohawk Territory. Creating two distinct pump prices will likely drive non-resident customers away, leaving a trail of failed businesses and lost jobs in their wake. The ability to lower Akwesasne gasoline prices comes at a greater cost than is first considered. The frustration with current world oil prices could leave Akwesasne a colder place to live indeed, especially along Route 37. Basing price-per-gallon desired discounts in Akwesasne Mohawk Territory on New York State excise tax schedules, for the sake of generating a potential savings amount per-gallon, would not be advantageous in maintaining a sovereign economic zone. This is just one perspective among many others.

-Chaz Kader, Executive Director, Mohawk Chamber of Commerce at Akwesasne