Sep 2009 Financial News

Economist: US$2.75 gas price too high

Sep 08, 2009

Economist Dr Indera Sagewan-Alli is concerned that the gas price of US$2.75 used for the 2010 budget is too high, and government may run a much higher deficit than the $8 billion projected. Sagewan-Alli said the current price is lower than the government’s projection of US$2.50 on the international market. She said growing supplies, storage facilities reaching full capacity and demand remaining flat are all pointing toward prices getting even lower over time.

She said additional supplies and new production facilities were expected to come on stream from the 4th quarter of this year, flooding the market and putting pressure on the price to fall. In addition, the latest strength in oil prices will not be enough to shore up the revenue shortfall she anticipates will come from gas.
She dismissed the 2009/2010 fiscal package as nothing more than a “political budget.”

The three-hour-plus budget presentation was delivered by Finance Minister Karen Tesheira this afternoon in the House of Representatives at the Red House in Port-of-Spain. The overall cost of the budget was $44.3 billion, down from last year’s record-breaking $49.4 billion. In a telephone interview yesterday, Sagewan-Alli said the budget left much to be desired as it failed to adequately address the major issues facing the people and the country.

She said while the presentation of the budget had changed, its content remained the same. “It was a political budget. The minister didn’t provide a break down of the funds allocated to the various sectors,” she said. “Last year it was very clear as to how much money was going where. This year, government gave us nothing because it doesn’t want to commit to anything.”

Sagewan-Alli said while the minister admitted that the era of cheap food “was behind us” and spoke at length about its “grand plans” for the agricultural sector, the nation’s farmers continued to suffer from a lack of resources and equipment. “Again, we don’t even know how much is being allocated to agriculture. Government needs to focus on food security to create better opportunities for export.”
She added that there was a need to divert social programmes, such as the Unemployment Relief Programme, and Cepep into the agricultural sector to allow workers the opportunity to “climb the ladder of success” and stop the “dependency syndrome.”

Pointing to the manufacturing sector, Sagewan-Alli lamented that the “same old measures” were mentioned and the minister gave no real incentives for manufacturers to embrace new methods and embark on research and development. Alli, a former MP, also stated that while the minister “celebrated” the country’s tourism sector, she failed to paint a realistic picture.

“Imagine, she pointed to the Summit of the Americas, but we paid for that. It did not bring about any revenue,” she said.
Alli said the country was still too dependent on oil and gas and added that exploring alternative income generating methods should have been placed on government’s front burner.

Article by: Cherisse Moe
Source: Trinidad Guardian
http://guardian.co.tt/business/business/2009/09/08/economist-us275-gas-price-too-high
Date Published: Sept-08-2009