By INDERIA SAUNDERS,Guardian Business Reporter,Inderia@nasguard.com

A local activist is urging the government to reconsider its rejection of Petrocaribe's oil-on-credit offer, arguing the deferred payment plan would free up cash for programs designed to spur on the faltering economy.

"The money you save from oil, you could put towards developing the infrastructure in the country to allow Bahamians to get to work and make things easier during these hard times," attorney Paul Moss told Guardian Business yesterday. "I think they would be foolish not to even consider that right now [because] if your budget annually is $1-billion, you save that billion dollars by getting oil on credit [and] there's a lot [the government] can do with those savings."

His comments come on the heels of a spike in oil prices that have driven up the cost of doing business not only for corporate Bahamas but the government itself. Prime Minister Hubert Ingraham has made no secret of BEC's financial situation in recent months and its strain on government coffers.

Other agencies are also grappling with higher gasoline prices, which have added to operating costs and recurrent expenditure. The situation is such that the government, considering a likely increase in social assistance programs, will likely run a deficit this fiscal year.

Moss argues accepting Venezuela's helping hand would at this juncture help The Bahamas.

Under a PetroCaribe agreement, 40 percent of a country's petroleum product costs would be issued as a concessionary loan for 25 years at a rate of one percent each year when prices equal or exceed US$50 a barrel. Right now crude oil prices are trading around $90 a barrel, however, that is expected to go up as the U.S. economy recovers and the greenback regains its investor appeal.

Currently, The Bahamas is largely dependent on the vagaries the international oil market and spot prices that fluctuate daily, if not hourly.

Analysts have largely argued that The Bahamas as well as other regional countries have opted not to sign onto the Petrocaribe program in order to keep from alienating the United States, increasingly involved in a war of words with the socialist-leaning Hugo Chavez.

That isn't Moss' primary concern, however. He's suggesting that the economics of the relationship should be our primary concern.

"Any money they save could drive development and deal with social situations that need help," he said.