Econ­o­mists Dr Ronald Ramkissoon and Tahar­qa Obi­ka are call­ing for greater clar­i­ty and con­sis­ten­cy in the Gov­ern­ment’s ap­proach to fu­el pric­ing, fol­low­ing Fi­nance Min­is­ter Dav­en­dranath Tan­coo’s an­nounce­ment in last Mon­day’s Bud­get that the price of su­per gaso­line will be re­duced by $1 per litre.
The mea­sure, which is ex­pect­ed to cost the State ap­prox­i­mate­ly $500 mil­lion in low­er sales rev­enue, has been wel­comed by mo­torists but has al­so sparked ques­tions about long-term pol­i­cy di­rec­tion and fair­ness in fu­el pric­ing.

Speak­ing at a meet­ing of the Peo­ple’s Na­tion­al Move­ment in Bel­mont last Fri­day, for­mer min­is­ter of fi­nance, Colm Im­bert put the im­pact of the $1 price de­cline in su­per gaso­line at $600 mil­lion.

“The have re­duce the price of su­per by $1. Trinida­di­ans and To­bag­o­ni­ans con­sume 600 mil­lion litres of su­per gas every year. So, mul­ti­ply 600 mil­lion by $1 and you re­alise that is $600 mil­lion in in­come the Gov­ern­ment just gave away,” said Im­bert.

In de­liv­er­ing the 2021 bud­get, Im­bert pro­posed to lib­er­alise the fu­el mar­ket, stat­ing at the then cur­rent in­ter­na­tion­al oil prices, sub­si­dies do not arise in the sale of pre­mi­um of su­per gaso­line, but they con­tin­ue to pre­vail in the sale of diesel, kerosene and LPG.

Im­bert cal­cu­lat­ed, in his 2021 bud­get pre­sen­ta­tion on Oc­to­ber 5, 2020, that in fis­cal pe­ri­od 2006 to 2020, the sub­sidy pay­ments made by GORTT had been in the vicin­i­ty of $25 bil­lion.

Ramkissoon said the $1 per litre re­duc­tion in the price of su­per gaso­line sig­nals a par­tial step to­ward what the pre­vi­ous ad­min­is­tra­tion had promised: a sys­tem where do­mes­tic fu­el prices would re­flect move­ments in in­ter­na­tion­al oil prices.

“What the pre­vi­ous min­is­ter of fi­nance had said be­fore was that over the years, the sub­sidy was be­ing re­duced, al­low­ing con­sumers to grad­u­al­ly pay clos­er to the true price of gaso­line,” he ex­plained.

“The plan was that if in­ter­na­tion­al prices rise, lo­cal prices would fol­low, and if in­ter­na­tion­al prices fall, the do­mes­tic price should al­so fall.”

He said while that for­mu­la has not been ful­ly im­ple­ment­ed, the cur­rent re­duc­tion rep­re­sents a de­layed re­flec­tion of low­er oil prices glob­al­ly.

“When the in­ter­na­tion­al price of crude oil fell, the sub­sidy be­came small­er, but users con­tin­ued pay­ing the same amount. In that con­text, this re­cent re­duc­tion is a pos­i­tive de­vel­op­ment,” said Ramkissoon.
How­ev­er, Ramkissoon cau­tioned that sub­si­dies on pre­mi­um gaso­line re­main, and their pres­ence dis­torts true mar­ket con­di­tions.

“We still have sub­si­dies on pre­mi­um be­cause that price has not moved in line with the for­mu­la the Min­is­ter de­scribed. The every­day dri­ver could, in some cas­es, be pay­ing more rel­a­tive to the ac­tu­al sub­sidy on pre­mi­um,” he said.

The econ­o­mist stressed the need for T&T to tran­si­tion to­wards a ful­ly mar­ket-re­flec­tive pric­ing mod­el. This would be a mod­el that sen­si­tis­es cit­i­zens to the re­al cost of en­er­gy in a glob­alised econ­o­my.

“At the end of the day, we need an econ­o­my that re­flects in­ter­na­tion­al price move­ments,” Ramkissoon said.

“Cit­i­zens must be­come ac­cus­tomed to these re­al­i­ties. An ef­fi­cient econ­o­my is one where state sub­si­dies go to­ward in­no­va­tion and new in­dus­tries, not where they en­cour­age waste­ful con­sump­tion that pol­lutes the en­vi­ron­ment.”

He said long-term com­pet­i­tive­ness would de­pend on how well the coun­try aligns en­er­gy pric­ing with glob­al trends while ad­vanc­ing its green en­er­gy tran­si­tion.

Mean­while, econ­o­mist Tahar­qa Obi­ka shared a sim­i­lar per­spec­tive, though he raised con­cerns about what he sees as in­con­sis­ten­cy in how fu­el price ad­just­ments are be­ing ap­plied.

Obi­ka said if the Gov­ern­ment’s pol­i­cy is to align do­mes­tic fu­el prices with glob­al mar­ket trends, then it must ex­plain why the same log­ic was not used to re­duce diesel and pre­mi­um gaso­line prices.

“If the price of su­per falls by such a sig­nif­i­cant mar­gin, it stands to rea­son that oth­er pe­tro­le­um prod­ucts, diesel and pre­mi­um, should al­so re­flect some re­duc­tion,” Obi­ka ar­gued. “By not do­ing so, the Gov­ern­ment is ef­fec­tive­ly pro­vid­ing a sub­sidy to users of su­per gaso­line.”

He not­ed that while pre­mi­um fu­el ben­e­fits a small­er group of mo­torists, diesel is crit­i­cal to the op­er­a­tions of the trans­port, food, and bev­er­age dis­tri­b­u­tion sec­tors.

“Diesel pow­ers the ve­hi­cles that move goods, peo­ple, and pro­duce across the coun­try. A re­duc­tion in that price could make a strong case for low­er maxi-taxi fares and re­duced dis­tri­b­u­tion costs, both of which would ease the cost of liv­ing,” said Obi­ka.

He added that the $500 mil­lion in fore­gone rev­enue un­der­scores the fis­cal cost of main­tain­ing par­tial sub­si­dies, warn­ing that fu­ture volatil­i­ty in oil prices could quick­ly re­verse the cur­rent re­lief.

“T&T is a price tak­er in the glob­al en­er­gy sec­tor. That means once in­ter­na­tion­al oil prices rise again, mo­torists should ex­pect to see high­er prices at the pump. The same sys­tem that gives a re­duc­tion to­day will jus­ti­fy an in­crease to­mor­row,” Obi­ka not­ed.

Both econ­o­mists agreed that the con­ver­sa­tion around fu­el pric­ing should move be­yond short-term re­lief and fo­cus in­stead on de­vel­op­ing a clear, trans­par­ent for­mu­la that ap­plies con­sis­tent­ly across all fu­el types.

Ramkissoon added that while the re­duc­tion is wel­comed by dri­vers, the coun­try must en­sure sub­si­dies serve a strate­gic pur­pose.

“We want to use our re­sources ef­fi­cient­ly. Sub­si­dies should sup­port in­no­va­tion and the shift to­ward re­new­able en­er­gy, not per­pet­u­ate de­pen­den­cy or in­ef­fi­cien­cy,” said Ramkissoon.

For Obi­ka, the key is­sue is pol­i­cy co­her­ence.

“If the gov­ern­ment’s prin­ci­ple is that do­mes­tic fu­el prices fol­low glob­al oil trends, then it must do so across the board. Se­lec­tiv­i­ty un­der­mines both trans­paren­cy and fair­ness.”

Both econ­o­mists con­clud­ed that while the price cut pro­vides short-term re­lief to con­sumers, the re­al test will be whether T&T can sus­tain a ra­tio­nal, fair, and for­ward-look­ing fu­el pric­ing mech­a­nism that sup­ports fis­cal dis­ci­pline and eco­nom­ic trans­for­ma­tion.