Sub­si­dies that have long in­su­lat­ed T&T con­sumers from the ac­tu­al cost of fu­el have not been sus­tain­able for some time, but re­cent de­vel­op­ments have made a dire sit­u­a­tion even worse.

The Rus­sia-Ukraine cri­sis is dri­ving up crude oil prices at a rate that makes US$150 a bar­rel a pos­si­bil­i­ty. This is un­wel­come news for lo­cal con­sumers, who will have to brace for some se­ri­ous pain at the gas pumps along with oth­er va­ri­eties of stick­er shock in the com­ing months.

Prime Min­is­ter Dr Kei­th Row­ley laid out the grim prospects for the coun­try at Tues­day’s Con­ver­sa­tions with the Prime Min­is­ter, af­ter de­tail­ing how suc­ces­sive gov­ern­ments had spent some $28.8 bil­lion to keep up the fu­el sub­sidy. How­ev­er, to con­tin­ue to do so will mean eco­nom­ic per­il for the coun­try, he warned.

While in years past high­er en­er­gy prices on the world mar­ket meant a wind­fall for T&T, this na­tion is well past those “mon­ey is no prob­lem” days when there were sub­stan­tial ben­e­fits from be­ing an oil and gas pro­duc­er.

Now, the na­tion is at risk of pay­ing a heavy price for be­ing too com­pla­cent about de­vel­op­ing and us­ing al­ter­na­tive and re­new­able en­er­gy sources.

That and our fail­ure to pur­sue eco­nom­ic di­ver­si­fi­ca­tion more ag­gres­sive­ly are ob­sta­cles that will hin­der T&T’s post-COVID re­cov­ery.

While the Gov­ern­ment tries to de­ter­mine how much fund­ing is avail­able—if there is any at all—to sub­sidise and take some ­pres­sure off cit­i­zens, what seems im­me­di­ate­ly ahead is a best-case sce­nario where sub­si­dies are re­moved, and the world oil price is kept at US$100 a bar­rel. Even then, there will be high­er fu­el prices all around, with pre­mi­um gaso­lene go­ing from $5.75 to $7.58 per litre, su­per from $4.97 to $7.46 and diesel from $3.41 to $ 6.58.

What seems in­evitable with those high­er prices, which will dri­ve up trans­porta­tion costs, are in­creas­es in a wide range of goods and ser­vices. The cost of liv­ing will, most like­ly, sky­rock­et.

The T&T econ­o­my has nev­er been in­su­lat­ed from these glob­al shocks and the ten­sions in Eu­rope will have quite a domi­no ef­fect in this coun­try.

The blow could have been soft­ened had more fo­cus been placed on man­ag­ing T&T’s nat­ur­al re­sources and en­hanc­ing the use of re­new­able en­er­gy and en­er­gy ef­fi­cien­cy years ago.

Gov­ern­ment is very slow off the start­ing blocks with its plan to shift to elec­tric ve­hi­cles and will face a chal­lenge in find­ing an eco­nom­i­cal­ly vi­able way to im­ple­ment that plan. That is main­ly be­cause even with con­ces­sions, elec­tric ve­hi­cles may be out of range for many mo­torists.

Al­so, based on the CNG ex­pe­ri­ence, en­cour­ag­ing mo­torists to switch from in­ter­nal com­bus­tion en­gines is eas­i­er said than done. At present, there are ap­prox­i­mate­ly 1 mil­lion cars on T&T’s roads, in­clud­ing about 40,000 hy­brid ve­hi­cles and even few­er CNG ve­hi­cles—about 15,300 at last count.

At this point, there are very few op­tions left to avert the high­er fu­el prices in T&T’s im­me­di­ate fu­ture, so the au­thor­i­ties need to press on with ini­tia­tives to ease the pain over the medi­um to long term.

That means set­ting up the in­fra­struc­ture, pro­vid­ing ini­tia­tives and set­ting up sys­tems for the elec­tric­i­ty-pow­ered trans­porta­tion fu­ture that Dr Row­ley spoke about on Tues­day.