Premium gas users: Drop $1 hike
PORT SPAIN
Trinidad & Tobago Express
Petroleumworldtt.com
12 31 08
CITIZENS are hoping that the drop in world oil prices could benefit them at the pump.
Several motorists noted that Government reduced the subsidy on Premium gasoline citing the high oil prices during the budget but now that oil has drastically fallen they want to reap the benefits.
While the cost of Premium gas at the pump is subsidised, selling at $4 per litre, many motorists think the price is still too high and went up at an inappropriate time.
Kern Sylvester, a consumer who was purchasing gas at a service station on Richmond Street, Port of Spain, told the Express, "Food high, light bill gone up, now gasoline has been risen too."
He said he saw the subsidy as a means by which the government was trying to share the wealth of the country with the everyday man but now feels like they are slowly trying to take that away.
Several other motorists who the Express talked to said they wanted to know the justification for the government deciding to stop the subsidy when it had said country was going through a period of economic wealth with a $70 oil price and windfall profits which were estimated to be high.
Now that prices have dropped, the fears continue, however.
"Now that oil drop below US$40 will the entire subsidy be removed?" asked one female consumer. "Will they tell us they can't afford it, because we belt tightening," she added.
She said while she understood that the state wants citizens to be less dependent on government subsidies and it was time to save money, she felt the subsidy is being reduced in a time of economic uncertainty and the government has no right to take away a subsidy when it has money to carry out several mega projects, which a vast majority of the population disapproves of or does not understand the real significance.
However, several Government ministers have been keen to explain in the past that even with the extra $1 added during the budget reading, Trinidad and Tobago still has one of the lowest gasoline prices in the world.
Trinidad and Tobago and other resource rich countries like Saudi Arabia, Kuwait and Egypt presently share similar gasoline prices, all less than US$1 per litre but higher than US$0.50.
Some more developed European countries- such as the Netherlands, Italy and Norway-pay some of the highest prices for gas at the pump, while T&T's oil rich neigbours in Venezuela now pay less than any other drivers in the world.
But economist Jwala Rambaran believes the issue of this country's subsidy needs to be looked at in detail before it is decided whether it goes or stays.
He said it is a matter of government policy and the policy-makers need to decide whether or not they agree that citizens should reap the benefits of lower gasoline prices because the country is blessed with resources or whether or not it is too high a cost for the state to pay.
However, he also explained that the national subsidy was initially set up on the premise that the big, foreign oil-producing companies would pay it through oil taxes, but since the country is now to a large extent a gas-based economy, the taxes which are collected from oil production are not enough to foot the entire subsidy bill.
The economist believes the subsidy legislation may need re-working, so that companies are also taxed on the gas they produce and therefore the taxes which they pay will cover a larger part of the subsidy costs as was the initial plan, instead of it coming out of the State's coffers.
"Some re-working of the Production Levy Tax could help clear up some of the argument's about whether or not we can afford the subsidy, because then we would not be footing so much of the bill. The State was not supposed to be paying the majority of the subsidy to begin with, and maybe that is the issue," concluded Rambaran.
Story by Aretha Welch from Trinidad & Tobago Express
-awelch@trinidadexpress.com
Trinidad & Tobago Express
Tuesday, December 9th 2008
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