Tuesday 7 July, 2020

Ramnarine: Hike in super gas will hit middle class hardest

Former energy minister Kevin Ramnarine said the $1 price hike in super gasoline may have detrimental effects as super gasoline is the country’s most consumed fuel in the country, accounting for almost half (47%) of total liquid fuel sales.

Speaking to LoopTT, Ramnarine said the partial removal of the subsidy on super gasoline, resulting in an increase from $3.97 to $4.97 per litre, will impact the middle class the hardest.

“I thought the increase in Super Gasoline prices in the budget by 25.2 percent was a steep increase. It will impact the middle class the hardest.”

‘I understand that the fuel subsidy has to eventually go but I thought the latest increase in the price of super could have been phased over two years.”

“As for the impact on the public, super is the most consumed fuel in Trinidad and Tobago, accounting for 47 percent of total liquid fuel sales; diesel comes in second at 32 percent,” he said.

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Ramnarine warned of the possible repercussions on public transport, especially taxi drivers.

“Most taxi drivers who use cars use super so I expect there would be some pressure on them to increase fares,” he said.

Ramnarine said given this situation, there may be an increase in the demand for regular gasoline as well as diesel and CNG.

Having said that, there has been an increase in the sales of regular gasoline. I am told that sales of regular gasoline have tripled in the past three years.”

“This is no doubt related to drivers switching from super to regular where they can access regular gasoline,” he said.

Ramnarine also said diesel drivers may even mix diesel with kerosene in order to reduce costs.

“I am also aware that there is a practice of maxi taxi drivers blending diesel with kerosene to reduce their cost. The Ministry of Energy needs to keep an eye on these trends,” he said.

Ramnarine added however that the price hike may pose opportunities for drivers to switch over to CNG.

“This increase in fuel prices is an opportunity for the motoring public to consider CNG vehicles, hybrids and other proven fuel savings devices.”

“What you may also see is a preference for diesel vehicles especially given the gap in prices between diesel and super,” he said.

Regarding the projected 2.2 percent growth in the energy sector in 2019, as stated by Finance Minister Colm Imbert, Ramnarine said this is the result of the increase in natural gas production associated with the Juniper project.

“Regarding growth in the energy sector in 2018, this is mainly related to the increase in natural gas production when we compare 2018 to 2017, and that is mainly related to one large gas project, the Juniper project by BP, which brought 590 million cubic feet per day of natural gas into production in the second half of 2017 and that impact flowed into 2018. The Central Bank confirmed this in their last press statement.”

“This growth demonstrates that the policies of 2011 to 2015, which were aimed at stimulating investment in exploration and developmental drilling, worked,” he said.

Imbert also lauded the recent Dragon Field natural gas deal and the planned construction of a 17km pipeline to the nearby Hibiscus platform, jointly owned by the National Gas Company (NGC) and Shell.

The project, which he said will revive the petrochemical sector, will cost an estimated US$1 billion.

 

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