The major problem with the billion-dollar gasoline subsidy is the length of time it has taken and continues to take for successive governments to do something positive about reducing and eventually removing the subsidy while, at the same time, providing alternative options for the use of gasoline.
All governments have recognised that replacing the subsidy was a politically sensitive matter and a dangerous economic measure to implement. In the first instance, they fear that removal, even reduction, would result in an instant round of price increases with the population holding the government politically responsible. The fact is that all governments are averse to taking political risks and so they have all equivocated and done nothing about this wanton wastage of resources.
In the case of the sure impact removing the subsidy would have on the economy, governments have been wary of triggering a virtual price explosion with the economy experiencing what the economists call the multiplier effect. This means that the maxi driver will raise his fare to compensate for higher diesel costs and so too will the truckers, the supermarkets, the market vendors, the restaurants et al. And soon enough, the cost of living would spiral completely out of control. If such a possibility were to occur, governments would be wishing the subsidy back in place to save their political skins. But as the story in yesterday's issue of the Guardian indicates, there was a time when the price of natural gas was high and locating the revenues to pay billions of dollars annually in subsidy was not difficult. That however is a time past.
The really unfortunate aspect of the inertia and incapacity of all of the governments which have been in power over the last 15 to 20 years is that there has all along been an alternative to simply cutting the subsidy and opening the economy to all the possible negative outcomes. Using compressed natural gas as an alternative fuel is an option that is two decades old. Beyond the establishment of a few filling stations, little has been done to encourage the change to a lower cost and far more environmentally friendly motor vehicle fuel. Time is not on the side of this Government, but time enough to engage in a study which would make a full assessment of the possibilities to shift to CNG. Assuming that the study finds the alternative to petroleum fuel to be efficacious on all fronts, then little time should be wasted in providing the population with an affordable substitute fuel.
It is well known that operationalisation of a policy shift often stumps implementation. With that challenge in mind, the Government, the energy companies, the service station owners, both National Petroleum and private owners/operators, need to establish the infrastructure to make the project work. That done, the government of the day will then not have a reason for political cowardice and without economic alternatives to eliminate any possible negative impact which would accrue by removing or greatly reducing the gasoline subsidy. Thereafter, vehicle owners who fail to convert to the CNG would have no one else to blame but themselves and so would be hopefully in a silent, very small minority. Immediately the switch is made to CNG for transportation, untold millions of barrels of oil will be freed up for export and other economic purposes from which the entire economy will benefit.
And while petroleum used any part of this planet affects all countries, wherever they are geographically situated, exporting more of the fossil fuels will certainly reduce the carbon footprint of T&T and so save us from paying the high-priced sanctions for contributing to climate change.