By Raffique Shah
August 19, 2015
Amidst the din of election campaigning—hundreds of ‘Kamla has a plan’ ads on all television stations during prime time, DJ music systems scouring the country daily, public meetings broadcast nightly on almost every radio and television station, more ads popping up every time you click on the Internet, assaults via phones and emails—I have yet to hear one frontline politician tell the people of this nation of the grim times the country faces if oil and gas prices keep tumbling, as they have done over the past two months.
I may have missed out on some responsible persons pointing out that the good times will not roll on forever, that revenues are declining even as the politicians promise more milk and honey, or, in these modern though not necessarily wholesome times, more fast foods, laptops, tablets (both IT and medical), hospitals, houses and so on.
After all, I am no glutton for audio and video punishment, so I hardly tune in to the electronic media outside of news time or sports coverage in which I have an interest. So I don’t want to be unfair to any courageous soul who may have tried to alert the population: Danger! Rough seas ahead!
I doubt it, though. Our politicians may be dubbed ill-informed, liars, misleaders, tricksters and a host of other derogatory names-but no one can call them foolish. And it would take a real fool to tell the masses, even as he or she seeks their support, that whichever party assumes office on September 8 will be forced to cut back on much of the freeness successive governments have doled out over the past 15 years or more.
The Financial Times (FT) calls it the ‘new oil order’, reporting that all the oil majors (Exxon, Chevron, Shell, BP and more) saw their profits and share-prices tumble by up to 60 percent, announced further slashing of tens of thousands of jobs worldwide, and shelving some US $200 billion in new projects globally.
Oil companies and traders, the FT said, are now bracing for several years of low crude prices, as WTI slipped closer to US $40 a barrel last week.
And that’s just one item of bad news. As if the gods are conspiring against us, global food inflation rose to 9.7 percent in June, spurred by rising costs in poultry feed. In the face of a severe drought almost throughout the Caribbean, unless the weather changes dramatically, we in “chicken country” can expect price increases, which have already kicked in with eggs.
Factor in the Greek debt tragedy, market and currency convulsions in China, and the imminent return of Iranian oil on the global market to add to the glut.
Oil producers and exporters from tar-sands Alberta though the shale-fields in the USA and neighbouring Venezuela that loses US $700 million a year for every dollar decline in prices, are howling bloody murder. Bear in mind that the tar-sands and shale-oil and gas producers partly triggered the production glut and prices slump: it has boomeranged to hurt them badly.
In less than one year, the mighty Saudi Arabia which calls the shots in global oil, drew down some US $70 billion from its reserves that stood at $800 billion in mid-2014. FT reports that the Saudis plan to return to the bond market to raise US $27 billion by year-end.
Now, considering the sea of woes I outlined above, affecting companies whose assets are larger than our GDP and countries much bigger and richer than ours, do you believe that T&T’s economy stands solid as a rock, alone in an ocean of turbulence?
The Prime Minister and ministers of finance and energy tell us that the economic fundamentals are sound, that there will be no cutbacks in spending or tampering with subsidies should they be returned to office. Are these people mad? Or are we, the population, the biggest fools in the world to believe we can spend, spend, spend in the face of plunging revenues and no significant diversification of the economy?
In 2008-2009, when oil prices plunged from US $140 a barrel to $30, earnings from oil (and gas) plummeted from TT $30 billion to $15 billion. Since the energy sector contributes 80 per cent of foreign exchange (and around 50 percent of revenue), is it any wonder that there is a shortage of foreign currencies?
With oil prices on a slide, no hint of rebounding, and gas prices falling in tandem, it is grossly irresponsible for any politician to ignore the harsh realities and promise the people lavish spending on prestige projects and never-ending freeness.
That’s like partying away while the SS Trinidad sinks: history will never forgive the captain or forget the crew.