Club Soda and Salt

No more stains

Plenty to argue with

Posted by clubsodaandsalt on June 9, 2006

Today’s Guardian includes an article (sorry, the Guardian hates permalinks) about the Government’s decision to increase this year’s spending by TT$4 billion (US$0.65 billion). The general thrust of the article is that the request for extra money is pretty reasonable, and that various economists and even Gerald Yetming all agree that it’s justifiable. In Yetming’s words, “there is little to argue with.”

Maybe it’s my argumentative nature, but I beg to differ. There are at least two things to argue with:

  1. $650 million to Petrotrin for continuing gasoline subsidies. These are meant to protect the Trinidadian public from the rising price of oil. This is incredibly poor policy. Firstly, it’s unsustainable. Oil prices are probably going to remain high for the forseeable future. How long is this subsidy going to stay in place? Secondly, a government subsidy spreads the costs of rising gas prices to all taxpayers. Why is that fair? Why shouldn’t the cost be borne by the people who use the most gas? That way, those people will find ways to curb their consumption, either by taking fewer trips, carpooling, moving closer to work, or taking public transportation. This brings me to my next point, which is that this money would be much better spent on shoring up our woeful public transportation. Get more buses. Spend it on better maintenance. Introduce rail, light or heavy. These would be sustainable solutions to high gas prices, and great investments in our future. As it is, these subsidies will simply continue to worsen Trinidad’s chronic air pollution problems, and leave our citizens stuck in gridlock.
  2. $630 million is going to be injected into the new BWIA. To be fair, I am holding off judgment on this until I hear some details about the plan for the new BWIA. If the plan is to create a new debt-free airline and leave the old BWIA as a non-operating debtor, (and includes selling BWIA’s Heathrow slots!!) I’m all for it. Almost anything else is sure to be yet another failure, IMO, and I suspect that that’s what Manning has cooked up (see previous discussion of Manning = not too bright). As a result, until I see some plans, I am filing this under “throwing good money after bad.” I don’t need to get into all the better places to spend this money; schools, hospitals, etc. You know the drill — standard liberal talk.

So there’s that. Additionally, I found this kind of worrying (emphasis mine):

But [economist Jwala Rambarran] noted that in terms of the oil revenue, it is just $500 million below what was budgeted. The Government had budgeted $8.7 billion in oil revenue but by March 2006 had only received $8.2 billion.

“This is pretty strange given that oil prices are so much higher. So this obviously says they were forecasting a higher level of production with a given oil price of $35,” he explained.

The budget called for an oil price of $35/barrel. Crude has been trading at twice that for much of the fiscal year. Am I to understand from this that oil production has been less than half what was expected? That seems a bit scary, right? The sentence is confusingly written so I could be wrong (it’s not clear to me whether the government had planned to receive 8.7 billion by the end of March, or 8.7 billion by the end of the fiscal year, which is obviously quite different.)

Next on CSAS: Response to Laurie’s pining for home. The mismanagement discussed above will feature prominently.


2 Responses to “Plenty to argue with”

  1. Interested party said

    Trinidadian is not Light Brent Crude n will not fetch $70 at this time. We have a lower grade of crude (API 22) that trades at approximately half that sweet crude API 35 -55 . Check yuh contents. Interesting point thpugh about oil revenue,

    Uncle MG

  2. admin said

    Fair enough. I knew that Trinidadian crude was a lower grade, but I didn’t realize the discount was so large. Thanks for the info. Still, it seems that the price has been higher than expected, so the failure to meet our targets still seems worrying.

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