Economist:
Stop gas subsidy
Port Spain
Petroleumworldtt.com
01 27 08
Economist
Dr Eric St Cyr says that although any reduction in the $2 billion annual
gasoline and
diesel subsidy could lead to higher inflation,
it can longer
be avoided.
St Cyr also says that the Government has to act
on the matter even though it could hurt it politically
as well.
He was responding Energy Minister Conrad Enill's
disclosure in the Express yesterday that the Government
is conducting a preliminary examination of the
subsidy in light of record high global oil prices.
"It's going to have both economic, that is,
inflationary impact and political fallouts but
my view is that we have to tackle it," he
said.
Although, he does not support the removal of the
subsidy altogether, he suggested that it can be
gradually lowered as opposed to a large immediate
reduction.
"One of the ways they can do it is to start
pulling back a little the first year, a little
the second year, a little the third year. So you
do what you 'call creep up on the problem'. It
is an issue that should be addressed. ... That
is $2 billion out of a budget of let's call it
$45 billion. That's over two per cent on a subsidy
one commodity," St Cyr said.
In the Parliament on Friday, Trade and Industry
Minister Dr Keith Rowley said the time had come
for the Government to reconsider the subsidy given
the global price of oil which is now hovering at
around US$90 a barrel and the fact that it is paying
this price to import oil for the State-owned refinery,
Petrotrin.
While Enill said that motorists still pay the
cost of increase through the taxes they pay even
if they do not do so out of pocket, any increase
in gasoline and diesel prices at the pump would
result in price increases throughout the economy,
including that for transportation an food.
"We know its going to have inflationary effects
but what you have is an open ended price subsidy
in that the price of petroleum products has been
going up but the price at which we have been selling
them here has been holding firm for the past four
or five years," St Cyr said.
"Where the prices do not reflect its value
you can get misuses of the resource," he also
said.
Story
by Juhel
Browne from
Trinidad Express
-jbrowne@trinidadexpress.com
Trinidad
Express
Tuesday,
January 22nd 2008
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