Rowley: Higher energy prices factor in fuel price increase

Energy prices have changed, so the Government had to make adjustments, was how the Prime Minister explained the increase in fuel prices during the 2023 budget.

On Monday, during the budget presentation at the Red House, the Finance Minister, Colm Imbert, announced the prices of premium, super and kerosene increased by $1 a litre while diesel increased by 50 cents.

He said while other countries taxed fuel, TT subsidised it, so the country’s response to the energy crisis would be different. The reason the Government did not further increase diesel prices, he said, was because it would have caused major price increases in other sectors.

At the same time, those on the lower income scale were eligible for a one-off $1,000 transport grant to ease the burden. He added that the Government did not remove subsidies on LPG, deciding to keep the $300 million in subsidies for the benefit of lower-income households.

Dr Rowley said fuel subsidies were decreased because the Government decided not to use all the unexpected $8 billion revenue caused by the unexpected increase in fuel prices only to subsidise fuel. He said he expected some pushback, but it was best for the country.

He said of the $8.2 billion of increased revenue, about $2.6 billion was spent in the mid-year review, $1 billion was put in the Heritage and Stabilisation Fund, $2.5 billion went to public servants, about $2 billion in fuel subsidy, and the remainder was used on other things that needed to be done.

“If we had not interfered with the fuel price at all, $7 billion worth of subsidies would have been required and the $8 billion that we would have got from the increased market arrangements would have gone straight to that.

“It means we could have done nothing else for the country, including the people who would have benefited from that.”

He suggested people could reduce personal fuel costs by buying vehicles that used less fuel, not driving during peak traffic hours, carpooling, and taking public transport.

He said the Government was not prepared to have public servants work from home to help reduce personal fuel costs, as the arrangement would take a certain amount of infrastructure and discipline he did not think the people of the country had.

“Let us not misbehave here over the changes that were forced upon us. This change in fuel price is not the Government’s doing. It’s the Government responding to a product which is priced internationally. And we, fortunately, are in a position to do something about it.”

Imbert interjected that the Government could increase the personal income tax exemption from $84,000 to $90,000 a year =because of the reduction in the fuel subsidy. “It’s a trade-off.”

Addressing the $25 to $50 price increase in travel to and from Tobago, Rowley said it was an expensive service. He said the two ferries on the seabridge cost $1 billion and the Government was still paying off the loan. And even with the increase, the ferry rides were still being subsidised for about $170 million, which was paid for by taxpayers.