DREADNESS Pt. 1
A few weeks ago I was in a meeting with some Energy company executives. We were talking frankly about a number of things, and this is what they said: ‘Rubadiri, there is no more gas. If we find some, it will be great, but…. And do you think we are going to wait until we are sucking fumes out of the ground to leave? No. Before that period comes all these fancy buildings here will empty out of us. Ghost-towns… Very soon, life in Trinidad-as-you-know-it will be over. In ten years time this country will look like Haiti…”
Haiti. Not Antigua or Barbados. But Haiti… And he didn’t mean ‘Haiti’ as in the noble nation of Toussaint and Boukman. He was talking about dread violence and poverty ‘Haiti’.
Now this could just be the old talk of men in a board room lime- but it invokes a dread reality that no one seems to be trying to come to terms with. Especially our politicians. Our life as a nation is about to fundamentally change. The ride of oil and gas is over. Another future is waiting for us. What we do in the next 3 years will decide what that future is…
I can hear some people saying, “Diri like to exaggerate eh! Haiti…” But the Scott Ryder Report at the end of 2010 says there’re proven gas reserves equivalent to 9 years of production and proven oil reserves equivalent of 14 years production. The doomsday scenario is not far off. But why doomsday? What will happen when oil and gas start to disappear?
Oil and gas make up 40% of the T&T economy. BPTT alone is worth almost 20% of our GDP. Our government makes up at least 70% of all economic activity in the country. Most of that is income derived from Oil and Gas. When that money disappears so does all the economic activity supported by the State. We’ve just been through a boom estimated to be worth over $300 billion. We failed to diversify away from Oil and Gas in that period. Instead we concentrated on big buildings badly built. During that period many foreigners and certain classes of locals made tremendous wealth. It did not trickle down meaningfully even to our middle class. At the end of that cycle of waste (when we missed an opportunity completely) we found our country operating at an annual deficit averaging $13 billion- in a budget of $50 billion. We now borrow money just to pay our wages- with money set aside for capital investments. The problem is that the money set aside to diversify the economy is not being spent on that. Almost none of the progressive programmes in the Budget are being implemented by government. We do not have time for this stupidity.
The reason that we are on a very slippery slope is this. Most of Trinidad and Tobago has a standard of living that cannot be sustained. We have a false standard of living built around the fact that oil money subsidises our life in invisible ways. Let me just mention three. Gas prices for our cars rely on a $4.8 billion gas subsidy. You remove that and all of a sudden a tank of gas that takes $130 to fill may cost $600… Can you calculate the cost of living that will multiply once that happens? Every single item flies upwards. T&T also now supplies free medicines at the cost of billions- including HIV medication that would cost an individual hundreds of thousands. What happens then to our health care? And there is no way that government can afford to continue its GATE programme. Tertiary level institutions will need tuition monies to survive. And I’ve not even begun to talk about the end of free primary and secondary education. Things are about to change…
These things will start changing in the years leading up to the doomsday scenario. Add to this picture our uncertain global economic times. Many established economies in decline are ones we depend on for preferential treatment or as places to suck up our surplus population. They will no longer be able to do this. I have been told that a lot of the Grants and Funds we currently have access to (but have not been utilizing) from EU countries will disappear in 2- 3 years. Those agencies are being pressured by domestic politics to stop giving away free money when they have problems at home.
I hope you’ve been doing the maths: Education. Health care. Gas. On top of this private companies and the State will not be able to pay their current wage-bills for the size of their workforce. We are therefore due for interesting labour times…
We have a short window in which to re-engineer our economy. It will require bravery. This administration is pussy-footing with plans in the last 2 Budgets to start the transformation. Nothing is being implemented. The new Petrotrin oil find must be used for reserves, savings, and for diversification. ‘Haiti!’ It is literally ‘Diversification or Death’.