The idea that rising industrial natural gas prices simply force big companies to “feel the pain” may sound emotionally satisfying. It is also incomplete, as the pain induced has a multiplier effect that extends well beyond big business.
Natural gas is not a luxury input used by a handful of corporations. It is the backbone of Trinidad and Tobago’s industrial economy. It powers factories that produce food, packaging, chemicals and building materials. Those goods end up on supermarket shelves, at construction sites and inside ordinary household budgets, not locked up in corporate vaults. Importantly, those goods end up in regional and international markets, earning valuable foreign exchange.
When gas prices rise sharply for industry, the cost does not stay inside boardrooms. In some areas, costs may be absorbed to buffer the impact on customers and remain competitive. But beyond a certain level, that increased cost is passed on. It shows up in the price of groceries, household goods, construction materials and everyday services. It pressures wages, slows hiring and makes investment riskier. In a small economy like ours, costs do not float in isolation; they ripple through everything.
The gift of our natural endowment of oil and gas enabled an industrial policy that leveraged natural gas pricing to generate a competitive advantage for our local manufacturing base. Part of that strategy was to establish a differentiated pricing structure for large industrial customers. It was not a favour to business, but rather a cornerstone of our industrial development and diversification efforts, enabling growth in the non-energy sector. The development goals were straightforward: protect jobs, keep exports competitive and prevent energy shocks from turning into inflation shocks that ordinary people would eventually have to absorb.
Publicly available operator data show that upstream gas prices in T&T have historically remained within a long-term band of roughly US$2.5 to US$4 per mscf, except during temporary global spikes. While the National Gas Corporation’s contracts with the upstream remain rightly bound by confidentiality, there is no evidence of extraordinary volatility that would justify treating the domestic industry as though it is in a permanent crisis environment.
Government argues it must stop subsidising gas. That may be fiscally true, as subsidies can have distortionary effects and promote inefficiencies. But such sudden and large increases undermine stable business conditions, hamper private capital spending for growth, and create uncertainty and unpredictability. The private sector, the leading force for economic diversification, cannot thrive under such conditions. It also cannot be expected to absorb the full burden of the cost increase. Faced with such steep costs, factories and production facilities have only a few options: raise prices, cut expansion, reduce hiring or shut down marginal operations. None of those outcomes benefits the average citizen. The pain does not stay with shareholders. It travels quickly to workers, consumers, and small businesses that depend on steady economic activity.
Businesses make profits by taking risks. There can always be a source of debate about how much is too much and what is fair but this is not about defending corporate profits. It is about recognising that businesses are not isolated from society.
Ending subsidies is a laudable aim. However, reform must be proportional, transparent, evolutionary and grounded in economic reality. Within commercial sensitivities, citizens deserve clarity on how gas pricing decisions are made and whether those decisions protect fiscal stability and economic viability.
A country cannot solve one imbalance by creating another. This debate is not Government versus business. It is about whether policy strengthens the economic foundation that supports households across T&T. When gas prices rise sharply, the cost always finds its way home.
