Where we stand‎ > ‎News & Comment‎ > ‎

GAS STATIONS SALE AND THE FUEL SUBSIDY by Cecil Paul and Gerry Kangalee

posted 7 Oct 2020, 05:37 by Gerry Kangalee   [ updated 7 Oct 2020, 09:11 ]

The decision by the government in the 2020/2021 budget to remove fixed pricing on petroleum fuels in the domestic market, remove the price "subsidies" and sell the peoples' owned gas stations to petroleum dealers should be of major concerns for citizens, particularly Petroleum dealers fixing their own prices for fuel at the retail outlets throughout the country.

The Minister of Finance - "Petroleum dealers will fix their own prices. This may see reduced prices at the pump". Yeah right! Fuel prices are a major input into the final cost of most products we consume in this country as road transport is our only mode of moving goods and all materials purchased both at the wholesale and retail sectors on a daily basis, hence the need to control this major factor of pricing, especially for essential goods and services.

The question is, why is our Government removing this major protective mechanism for a majority working people population? Price control on fuels is an important economic policy that curbs inflation in a market of open and varied prices for most of the other essential goods and services (especially food prices) as ours is a society riddled with unscrupulous retailers.

Market forces driving down prices is an economic theory not present in our business culture as cartelism for fixed pricing reigns in our marketplace as it satisfies all operators by creating a measure of equity in customer patronage and most important satisfies profitability.

Governments have never made a convincing argument that fuel prices are subsidized when both Petrotrin and National Petroleum, producer and marketer of these energy products, have all been profitable over the years. Subsidies are a tool of enhanced profitability and not a price controller.

The Petrotrin closure based on reports had nothing to do with fuel sales and resulted from management issues and foreign loans. Fuel prices contain a heavy regime of government duties and taxes ranging from excise duties, road taxes and VAT before all other costs are added to arrive at a final price. The duties and taxes obviously go into government coffers, so this argument about subsidizing fuel costs to citizens is questionable.

Government ownership of the commanding heights of the economy is in fact peoples' ownership with elected governments as representative of the people. The government by announcing in the current
NP Gas Station - Crown Point, Milford Road - Tobago - TriniGo.com budget that "NP gas stations will be sold to private dealers" is in fact transferring major economic assets of the people, held and trusted in a state enterprise, to private business people without the peoples' consent.

This gas station issue is one in which possibly billions of dollars of prime real estate and major peoples' owned business entities, all over the country distributing essential fuel products, will no longer be owned by citizens but now be the property of private gas station owners of the upper business class. This decision is made by a newly elected government facing a pandemic and like other countries besieged by economic difficulties. Is our government selling the family jewels cheaply to deal with money shortages? These economic difficulties do not justify these decisions taken by government. 

These assets, probably worth hundred of millions of dollars, are being disposed of in the absence of the  Public Procurement and Disposal of Public Property Act, which was assented to in 2015, being proclaimed. If you believe the Prime Minister's assurance that "nothing is reserved for anybody conglomerate or solitaire" (?), then I respectfully refer you to his statement that the government "is not closing down Petrotrin and in case you were just opening your fridge and you didn't hear that when you closed the door, let me repeat it - the government of Trinidad and Tobago is not closing down Petrotrin."

If you swallow the line pushed by Imbert and Rowley that competition will keep gas prices manageable - all you have to do is "just go to another next gas station", you should be aware of how capitalist economics work - who have more corn will feed more fowl. Competition leads to monopoly. One capitalist kills many. Those with more resources will drive scrunters out of the market by underpricing them and by utilising political connections. That is how the conglomerates dominating the onshore economy became conglomerates. Let us not be naive. Once the fuel subsidy goes, the cost of living will climb ever upward as will the closure of many small and medium businesses.

The majority of people (poor and middle income) voted the government into power to improve and protect their standard of living and not to introduce policies that could result in a reduction in their economic circumstances and that of their dependants. They did not vote to transfer their collective properties into private property for the already wealthy business class. The government did not bring this major economic issue to the people during the election campaign and the people are owed an explanation for this outrageous decision. In the continuing debate on this 2020/21 budget we look forward to (1) Reversal of the sale of our peoples' assets (gas stations) to private dealers (2) reverting to controlled fuel prices at the pump. But this can only happen if pressure comes from the ground. people will take pressure for only so long. Remember, if not relieved, pressure does bus' pipe.
Comments