Increases in the prices of gasoline and diesel receive a huge amount of media attention every time that the subsidy is reduced, and prices rise. What does not receive any media attention is the fact that over the period when the subsidy has been gradually removed and prices have risen, the total volumes of both diesel and gasoline sales have significantly declined.
These declines in the total volumes being sold will have obviously ameliorated some of the impact of price rises at an aggregate level. Diesel sales have shown the biggest declines, falling by around 40% since 2010. Gasoline sales, by contrast, gradually rose through the period 2010 – 2016 and have declined by around 27% since then.
Graph 1: Annual diesel and gasoline sales 2010 - 2021
Source: Ministry of Energy - Monthly Bulletins
(Note that the data from 2018 is estimated based on the Jan – October figures, as the Ministry of Energy publications do not record the sales volumes in November and December 2018).
The pandemic shutdowns in 2020 and 2021 would account for some of the decline in sales in those years, but the decrease was evident long before covid was on the scene. While sales did drop during the most intense months of lockdowns, they quickly recovered in subsequent months to show a similar pattern.
Graph 2: Monthly diesel, gasoline (super and premium) sales 2019 – 2021
Source: Ministry of Energy - Monthly Bulletins
There are several reasons why the sales volumes of both diesel and gasoline could have fallen over the past decade. The exact role of each of these factors is not possible to determine from the data and should be something that is researched further, not least as part of an overall transportation policy. These are some of the factors that could contribute to the decline in consumption:
Improved fuel efficiency: improved fuel efficiency in newer vehicles has probably accounted for significant decreases in both gasoline and diesel sales. This is likely to be the major cause of the decline in total sales, as businesses and individual drivers have purchased newer and more fuel-efficient vehicles. The advent of hybrid vehicles with much lower overall fuel consumption has probably had a major impact on total sales. Rising costs of fuels obviously make more efficient vehicles more attractive.
Cracking down on illegal exports: back in 2011 the national news was full of stories about illegal diesel bunkering operations, where huge volumes of subsidised diesel was being purchased from the local retailers and illegally sold to foreign marine vessels. At the time this was reported to be a multi-billion-dollar criminal enterprise and would have accounted for significant volumes of sales, especially of diesel. Cracking down on this activity by law enforcement and stricter rules about sales from retail stations would have resulted in declines in volumes sold.
Switching to CNG: the subsidies to encourage maxi-taxis and other vehicle owners to switch to CNG and the sales of new CNG vehicles (such as the Honda City) will also have contributed to decreasing sales of both diesel and gasoline. Again, the rising costs of liquid fuels obviously make the much cheaper CNG more attractive.
Changes in driving habits: some decreases in volume of sales may be accounted for by consumers adopting different habits in response to higher prices, for example car pooling or driving at times with less traffic. Work from home policies and flexitime, adopted in many larger private-sector companies, might be a factor in this regard. The impact of changing driving habits was obvious during the pandemic lockdowns, as shown in the sharp drop in sales in the months with the most intense lockdowns. However, the continued traffic woes, however, suggest that changing driving habits might not be a major factor.
Increase in electric cars: the very small numbers of EVs on the roads in Trinidad & Tobago mean that this is unlikely to have had any discernible impact on fuel sales to date. This will likely become a factor in the future.