THE CURRENT STATE OF the world’s crude oil industry is one which Barbados should welcome. It works to the country’s advantage. All evidence suggests a continuing suppression in oil prices this year and beyond.
Things have changed drastically since June 2014, when Brent crude was selling at US$115 a barrel. Today the price is hovering at US$30 a barrel and is unlikely to surpass US$40 by yearend, which would still be below production costs.
It may be a “pricequake” situation for oil-producing nations but a godsend for non-producers long held to ransom and at the mercy of high crude oil prices which created havoc with many economies. The change in fortunes can clearly have enormous implications, given the role of oil and its revenues play in the world’s geopolitical structure from Abuja to Caracas to Riyadh.
The drop in prices results from a combination of factors, of which the most obvious was supply outstripping demand. Only a war in the Middle East, a sharp and sudden demand for more oil international or the Saudis deciding to boost production can change the prevailing situation. Yet there are reasons why there can be no optimism.
But Barbadians have little concern about the international intrigue of an industry which has benefited the few and squeezed the majority. The focus is on the lower oil prices, with motorists enjoying a small dip at the pump. The main yearning by Barbadians is that measures be put in place to forego the burden of a return to the high oil prices experienced up to two years ago. Crude oil will rise from its current depths.
That is why this country must practically apply in a widespread manner the concept it consistently promotes, a green economy. We must move away from fossil fuels and fully utilise the inexhaustible sources of solar and wind energy.
Understandably, there are some negatives for Barbados with depressed world oil prices. Those plans for offshore oil exploration by BHP Billiton may be slowed or eventually shelved, given the poor prospects for returns on investment. Tax revenues could also suffer.
That is why the Freundel Stuart administration must address how it will accelerate the growth of the alternate energy sector. This country must not allow foreign oil producers, who are neither interested in the performance of its economy nor the drain on its foreign reserves to pay for their commodity, to dictate the way forward. We must look at the opportunities alternative energy offers, particularly a range of quality jobs.
We cannot be at the forefront of the thrust for a new world order on climate change, as agreed to in Paris in December, and then vacillate on measures to propel the rapid growth of the alternative energy sector. Cheap oil must not kill solar and wind energy. This is the time to promote change.