A economist has advised the Government to be very careful with its timing when removing the fuel subsidy.
Dr Vaalmikki Arjoon gave this view in response to concern raised by the Prime Minister on Tuesday, that Government now has to find $700 million to sustain the fuel subsidy with the rising cost of oil.
“When we go to purchase gasoline at the pump, we import that, because we closed our refinery several years ago. And now the Prime Minister has signalled an intention that the fuel subsidy is simply not something sustainable. In fact, for many years now, in the past, many of us have agreed that it is not something that was sustainable,” Arjoon said.
“I believe that they should really spare the nation at least for some months ahead, especially since they’re going to be earning more revenues like royalties, the supplemental petroleum tax, et cetera. Now, I agree a subsidy is not sustainable but we could really end up undoing any progress we made, recovering from the damage of the COVID 19 pandemic and have devastating consequences in overall prices or the cost of living and doing business locally,” he further said.
Yesterday, taxi driver Roger Miller told Guardian Media he spends on average $800 in fuel a week. He said for a while now he has had to do a lot more to provide for himself and his family.
If the price at the pump goes up, he is worried he’ll have to make even more adjustments, a sacrifice his passengers will also have to make.
“To hold things down, we will have to do longer hours, come out earlier and finish later and even take jobs that will cost about $200, we might have to cut it to $100 just to keep things flowing,” Miller said.
Lyndon De Gannes, a motorist, said he too is worried.
“First thing came to mind is that there are so much workers in Trinidad and Tobago who are working on depreciated salaries… to pay more at the gas tank now, it is a difficult time we are living in,” De Gannes said.
Another motorist, Ricki Ramnarine, said, “Fortunately, I have a diesel van and I think that the increment in price would be a little bit less. But certainly, I have a concern for the people who pay in gas and who live in the margins of their income.”
“I’m on the road a lot. I fill up the tank, usually at about $200. But when I had bought diesel initially, which would have been probably about 10 years ago, I used to fill up the tank at about $100 or so,” Ramnarine added.
Arjoon warned, “In the very near future, we could be looking at an inflation rate in the United States of about 8.2 per cent – they are our largest trading partner – so, when their prices are going up by that amount, it means that when they export to us or when we buy from them, we are going to be paying those higher prices as well. Remember that for a lot of consumers, their purchasing power has been diminished, so they haven’t really seen an increase in salaries since they’re still living on 2013 or 2014 salaries. So, your purchasing power has diminished and that, of course, is going to be worsened, given higher prices.”
Arjoon added, “It is the middle-income group, especially the middle- and lower-income group and small and medium-sized businesses who are going to feel the brunt of it.”
He said the question is whether Government is only looking to remove the fuel subsidy or liberalise the price at the pumps as well.