We get a lot of people either asking about, or complaining about, the Galapagos Fuel Surcharge. This is totally understandable, as the price of oil has fallen substantially in the past 6 months, yet the fuel surcharges remain in effect. What's going on?
The fuel surcharge is a rather complicated affair, as it has nothing to do with the retail price of gasoline or diesel in Ecuador. Fuel prices in Ecuador have been subsidized by the Ecuadorian government for quite some time. In 2008, for the first time, the government decided to adjust their fuel subsidization policy by issuing decree #921, taxing (or lifting the subsidy on) all Galapagos yachts that use more than 4000 gallons of fuel per month. This decree was handed down in Spring, 2008, with virtually no warning, effective June 1, 2008. The tax applies to all yachts that use more than 4000 gallons/month, and all of these yachts have been forced to add a fuel subsidy to their prices for 2008-9 to compensate for this last-minute government tax. Some yachts avoided this tax because they use less than 4000 gallons/month due to a central island (not visiting Isabela, Fernandina, Genovesa, etc) itinerary and/or small boat size, while the rest had to pass it on to their passengers.
So, the smaller yachts with central islands itineraries aren't affected by the fuel surcharge. The boats with the more comprehensive itineraries (including Genovesa and/or Isabela), and the larger, more comfortable boats, are all affected by the government's fuel policies.
The fuel surcharge won't go away until the government changes its policy regarding subsidies, and it doesn't appear this is going to happen in te forseeable future. Until then, fuel surcharges will be common on the larger, more comfortable boats with the best itineraries.
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Ecuador President Rafael Correa has refused to make an interest payment of $US30.6 million coupon payment on its 2012 global bonds by December 15, triggering the first sovereign default since the credit crisis started.
According to The Australian (http://www.theaustralian.news.com.au/business/story/0,28124,24794064-5018001,00.html), "The voluntary decision to skip interest payments will likely plunge the country into financial turmoil at a time when global markets are roiling from the credit and economic crises.
"Ecuador's credit ratings will be slashed to default, its overseas borrowing costs will soar and foreign investment is likely to decline. Complicating matters, the price of oil, Ecuador's main source of revenue, has plunged in the last few months from historic highs.
"Moreover, the Government could be cut off from multi-lateral lenders such as the World Bank and the Inter-American Development Bank, though in recent months it has been seeking alternative financing from countries such as China, Iran, Russia and Venezuela."
So what does this mean for tourism in Ecuador? I don't think anybody knows at the moment. I guess we will have to wait and see, but I won't be surprised to see some local tour operators go out of business. Fortunately, the providers that Detour works with are some of the most stable, best funded tour operators in Ecuador.
"Ecuador's credit ratings will be slashed to default, its overseas borrowing costs will soar and foreign investment is likely to decline. Complicating matters, the price of oil, Ecuador's main source of revenue, has plunged in the last few months from historic highs.
"Moreover, the Government could be cut off from multi-lateral lenders such as the World Bank and the Inter-American Development Bank, though in recent months it has been seeking alternative financing from countries such as China, Iran, Russia and Venezuela."
So what does this mean for tourism in Ecuador? I don't think anybody knows at the moment. I guess we will have to wait and see, but I won't be surprised to see some local tour operators go out of business. Fortunately, the providers that Detour works with are some of the most stable, best funded tour operators in Ecuador.
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