The Trinidad and Tobago government says an increase in oil prices on the global market will not necessarily translate to a cash windfall for the oil-rich twin-island republic.
On Wednesday, oil prices climbed higher after the US announced a ban on the importation of Russian oil in retaliation for its invasion of Ukraine with Brent crude futures at US$124.78 a barrel, down 2.5 percent on the day, having eased since Monday’s high of US$139.13.
Prime Minister Dr. Keith Rowley, speaking on the “Conversations with the Prime Minister,” aired on television Tuesday night, said the oil production is not as high as it had been in previous years. Therefore the country will not benefit tremendously from high oil prices on the global market.
“The government through the Ministry of Finance…will have to take a decision as to how much funding we can find to subsidize and take some pressure off the population. But the population cannot be insulated completely from oil running at US$130, US$140 a barrel.
“Do not see the hike in oil prices as opening up huge possibilities for earning because the volumes at which we are producing oil now are not the same volumes we had before when the subsidy was absorbed.”
Rowley told the program that the higher the price per barrel of oil, the higher the subsidy from the government.
“If the oil price is at US$110, the estimated levy would be US$509 million, but the subsidy would be US$2.9 billion, and if it goes up, say US$120, US$125 in that area, the estimated subsidy would be in the order of four billion dollars, and the (Stabilization) Fund will have in it about 600 million dollars.
“If it goes up to US$150, the government’s liability for subsidy would be $4.48 billion. The question is can we find that money to subsidize fuel to insulate the population from this,” he said, adding that decision will have to be taken on whether to adjust the fuel subsidy which will have an effect on the motoring public.
“Currently, the price at the pump for premium (gas) is TT$5.75 (One TT dollar=US$0.16 cents) per liter. Super is TT$4.97, and diesel TT$3.51. It is not subsidized, and oil is US$100 a barrel (and) if there is no subsidy on premium, the price at the pump will have to be TT$7.50, two dollars more than you are paying now.
He said if there is no subsidy on super gas and if the price of oil is at US$100, then motorists will pay an unsubsidized price of TT$7.46 with diesel increasing to TT$6.58.
He said the subsidy program remains in place. Still, if the present situation continues, the Trinidad and Tobago government will have to find TT$767 million to preserve it, with the finance minister seeking to borrow such funds and questions whether this would be the right way to go.
CMC
