By Raffique Shah
November 30, 2015
If “Santa Colm” assures the populace that their Christmas will be bright, not blue, then we have no reason to doubt the man.
After all, Acting Prime Minister Colm Imbert is the substantive Minister of Finance, in which capacity he has access to data and information pertaining to the state of the economy, especially Government’s revenues and expenditures, that you and I will not see.
What we do know is that the energy sector, which encompasses oil, gas and petrochemicals, has been in trouble for some time now, suffering from “gas pain” and low oil production, and since late last year, from a near-collapse in oil and other petroleum products prices.
These bare facts, which are in the public domain, lead us to conclude that Government will garner significantly lower revenues from the sector than it did one year ago, and several years before that.
But, as someone who tries to stay abreast of these developments because I strive to be an informed citizen, I often find it quite confusing.
For example, in fiscal 2013 (October 2012 to September 2013), oil production averaged 81,000 barrels per day (bpd), and the average price of West Texas Intermediate (WTI) crude was US $100 a barrel. Natural gas production averaged 4.1 billion cubic feet a day (bcf/d).
Revenues from the energy sector, presumably including petrochemicals such as ammonia and methanol, but maybe not all revenue streams (royalties, profit sharing), amounted to $26.4 billion.
In fiscal 2014, with oil production slightly lower, gas the same, but WTI price averaging US $59 a barrel-a 40 percent drop, energy revenues climbed to $28 billion. Don’t ask me how that happened: ask the experts who compiled the Ministry of Finance’s Review of the Economy.
This confusion did not come from the Central Statistical Office (CSO), where data is mostly outdated, or the Central Bank, which has some relatively recent bulletins but some equally ancient publications on the economy. In fact, I find that even the once-reliable Ministry of Energy Data-centre is lapsing: its most recent monthly bulletin is for the month of August.
But I digress. I was saying that in the face of all the bad news coming out of the energy sector, the gas curtailment crisis that has negatively impacted many of the petrochemicals plants, the Finance Minister is telling us that we can enjoy ham, lamb and jam for the Christmas, and not worry about tomorrow or next year.
He promised to pay outstanding monies due to public sector workers, more than $1 billion I believe, based on generous increases awarded by the PP Government, about a week before Christmas.
Now, I can’t blame these workers for licking their chops in anticipation of a really merry Christmas.
I wonder, though, whether Mr Imbert has given consideration to several other categories of public sector workers, from lowly Forestry Division employees who are owed several fortnights’ pay, to some doctors who are in a similar position.
And while I know that NGC employees are well-paid by any standard, is the invitation to blow it all for the Yuletide extended to them, facing a wage-freeze as they are?
Really, I think the minister should be more circumspect in the signals he sends to the populace, especially when they seem to be at odds with the Prime Minister’s exhortations. Shortly after he assumed office, Dr Rowley said that the “gas curtailment” situation was real and disturbing.
And in view of the outlooks for both oil prices and the national economy, he expressed concern over the wild consumerism that seems to have gripped the society. This has not eased. Last Thursday, the very wealthy and Americanised among us feasted on huge turkeys, and the Black Friday shopping spree has descended upon us with all its frenzied negatives.
No one wants to be a “Scrooge”, not in this country where Christmas has long crashed past the race and religious barriers. People must enjoy themselves. But they must be mindful of the precarious state of the economy, of not splurging.
Tomorrow might well turn out to be grim. Recently, Goldman Sachs released an oil-price outlook that projected as low as US $20 a barrel next year before any recovery. They pointed to strategic reserves in countries like the USA and China almost filled to capacity, and scores of oil tankers laden with crude, anchored at sea.
These pundits are often wrong, and we have to hope they are: if the price goes that low, “we dogs dead”, as Trinis would say.
While the Finance Minister must instil confidence in the population, he must also inject a dose of reality in the residents of Rum Street Trinidad who, in the worst of times, party like there is no tomorrow.
Oil used to be king of the last century but it is on its way out. Climatologist have identified oil as the number one culprit in climate change because of the huge amount of carbon it produces daily. Those who are hoping for oil to return to higher prices must take note that at the climate change conference in Paris many nations pledge to reduce green house carbon emissions considerably. Though they may not achieve anything in the short term with strong political determination the long term does not look good for oil producing nations.
Diversification is the way forward. The current lowered oil prices is a battle between Saudia and shale oil producing United States. The Saudis can go as low as $10 per barrel to scuttle the expensive shale oil production and extraction process.
As for TNT one must realise being a small fish in a large pond belt tightening includes wage freezes, wage reduction, and tight fiscal spending. The government must spend but it demands spending wisely. All projects must be viewed with long term lens. Can return in investment be made? Or will the Chinese own our economy as they do the US? It is always tempting to borrow and push debt further down stream.
TNT future remains bright, with a strong expat community and a very strong energy and manufacturing base things can be better. The former administration was heading in the right direction in some areas, building facilities to encourage tourism, building facilities for health tourism, and heavy sport investment. Areas were they we weak in, giving too many high salary increases and creating a long term unsustainable social system. Plus too much borrowing. Living within our means must be encouraged.
Concur with the above but here are some qualifiers. Pledges are coming forward at the Paris conference but those same oil producing countries need to clean the emissions from their respective industries, meaning the need for capital costs to effect such technology resulting in increased price of their products e.g., refined oil. If the governments subsidize or not where are the $ coming from, eventually us.
Diversification, yes, but that should be mainly in the agricultural sector now. The destruction of the sugar cane plant will eventually follow the pathway of rice, cocoa etc. cultivation in the past. The strength of any nation is in the capability of sustaining itself. America use food as a weapon.
Other sectors such as tourism need to be explored but tremendous education is required for the population at large (civility of it’s citizens) by being pleasant and welcoming. The spate of crime and murders are a deterrent presently.
This current administration has already introduced the highest budget and is now going to parliament for the approval of a $15 billion loan. This type of reckless spending in a time when oil prices is down and fiscal restraint should be excercised.
They have the support of the unions and the media so if frog legs is on the menu everyone will be cool with. The problem is children down the road will be picking up the tab. PNMites have consistently accused the previous administration of over spending, will they accuse this administration of over borrowing?
Mamoo, please explain “reckless spending.” I might be misinformed, but I think there was a reduction on the amount of Ministers and Ministries (e.g. Ministry of Diversification and Social Integration), the vehicles for friends and family and the helicopter rides. And that is only on the surface.
Dr. Moonilal boasted that he had six (6) offices, and that is only one ex-Minister. Lord knows how many the ‘Queen’ had. So please explain what I consider a reckless statement about reckless spending.
KAML 2010-2015. …THAT IN ITSELF was reckless spending
This is what the PNM left the PP to deal with: Here are some examples: CLICO $25 BILLION
Ministry of Housing $8 BILLION
WASA $4 BILLION
Outstanding VAT $2 BILLION
Owed Contractors $2 BILLION
Loan for Waterfront $2.7 BILLION
Outstanding Fuel Subsidy $6 BILLION
Loan for Tarouba Stadium $500 MILLION
Loan for RACKET RAIL $500 MILLION Outstanding Wage Negotiations $9 BILLION
Udecott debt 7.7 BILLION Almost $60 BILLION in outstanding debts and that’s just a fraction, so when PNM and the so-called economists asking where the money going, they must speak the truth. PNM is the biggest tief.
Anyone citing anthropogenic climate change as a determining factor of future oil consumption should have their head examined. Either that or they’ve been drinking too much puncha-creme.
There is no easy way to diversify away from T&Ts oil and gas dependent economy. The majority of the GDP and foreign earnings are based on fossil fuel revenues.
Its the same with manufacturing. Without cheap (read: subsidized) oil and gas the local manufacturing sector would be unable to compete.
As for other avenues of diversification they’re a mixed bag. Health tourism? Surely you’re joking.
The medical system in sweet T&T is a disaster. A visit to any of the regional hospitals or the private clinics (aka death clinics) should disabuse even the most casual observer of T&Ts ability to leverage its medical ‘expertise’ into a sustainable foreign exchange earnings.
Long story short: Were stuck with an oil and gas economy. For better or worse.
I want them to borrow the full $40 billion
“He promised to pay outstanding monies due to public sector workers, more than $1 billion I believe, based on generous increases awarded by the PP Government, about a week before Christmas.”
The PNM generally give with one hand and take with the other hand. Colm will find a way to increase taxes of some kind to compensate for the shortfall.
I see you have found your crystal ball.
And I hope he does