The problem we face in T&T is not caused by the collapse in oil prices as our daily oil production is below 80,000 bpd. The problem is the glut of LNG seeking buyers by any means necessary and any rise in oil prices say to USD45 at best for WTI with the consequent rise in contract LNG prices triggers a rebellion of buyers on contract. Contract due for renewal in 2017 and 2019 are under pressure already by a buyers’ rebellion for those contract prices to reflect market reality. Qatar has already signalled to buyers its willingness to cut prices to retain market share increasing the pressure on LNG producers and Russia and Norway are flooding Europe with pipeline gas to maintain their market shares of the market. Some have insisted that in the next two to three years the market will sink into a bloodbath very similar to the oil market. Others have stated that the LNG market will attain balance possibly by 2025 until then glut is the reality. Why then must BP tap increasingly smaller pools of gas to supply LNG trains to market a product in a glutted market until possibly 2025? The issue is no longer incentives from the government to tap pools of gas but to change the business model that will allow the gas producer to maximise returns on investment on both the local and international gas markets. Then the gas producer must sell gas directly to the end users who use gas as an input in an export driven enterprise in T&T. The cost of gas to the LNG trains must be competitive in light of international market realities hence little or no rents charged. That is the advice you will get when you take your business to the purveyors of the Washington consensus. In this new revenue horizon you must then radically cut your state expenditure and deepen the neo-liberal order the politicians in T&T love. If you want to borrow because you are addicted to grand state projects that change little but the balances on offshore accounts you must have the assent of the Consensus and to get this assent you have to deepen your dance with neo-liberalism where less than 1% become even richer and the rest of us learn how poverty is the hottest part of hell. The present right wing neo-liberalism worshipping government of Norway dipped into the sovereign wealth fund and the dippings continue to escalate because neo-liberalism solves only the problems of the super rich whilst we the poor have no problems to be solved because the exploitation our problems make the super rich what they are. To address our poverty is then to render neo-liberalism irrelevant. Out politicians will never accept this and the death of the politics of race.
Those who don’t earn foreign exchange/hard currency in T&T insist they are entitled to spend it as if it is their personal property. In a social order where the significant earners of hard currency are energy companies and the government collects its share of this hard currency through taxes and rents on the energy companies the talking heads bump their gums to talk about diversification without spelling out if these non-energy pursuits will at least earn the for-ex they consume. There is a vast difference between creating jobs utilising for-ex you don’t earn and cannot earn and creating jobs whilst being self-sufficient in for-ex needs and paying taxes and rents to the government in for-ex. The local manufacturers are a long way from this state of operation and they must learn from the Jamaican enterprises that are now globalised and self-sufficient in for-ex consumption such as Jamaica Broilers Group. The Caricom market must now be replaced by North Atlantic markets then you can speak of manufacturers before that then you must speak of pampered assemblers living off subsidised inputs and a captive market closed by tariff and non-tariff barriers. Learn from the strategic plan of GraceKennedy. But the abiding reality is that the for-ex collected by the state overwhelmingly comes from the LNG exporters and the world LNG markets are in glut which is expected to deepen in the next five years as new LNG plants come alive in the next five years. It is estimated that by 2021 25% of global LNG production will be homeless as it seeks buyers with the impact on LNG prices being obvious. The May 2016 Asia LNG spot price is USD 4.20 per mmbtu and for June 2016 USD 4.00 per mmbtu. Of the 17 LNG cargoes purchased by YPF of Argentina for mid-year delivery LNG traders dominated the suppliers to the detriment of energy companies because LNG producers are selling homeless production to traders for the cash flow rather than hold stock and seek out buyers. In six cargoes sold to CFE of Mexico traders won 3 of 6 supply contracts. The word among traders is that contracts for June and July shipment were all sold for below USD 4.00 per mmbtu. This reality means that the government of T&T cannot defend a TTD exchange rate below TT7.00 to USD 1.00 without running down the for-ex reserves to dangerous levels and 9 billion USD is no nest egg given the rate entitled citizens love to blow it at. Learn from the experience of other energy economies that the measures announced simply do not protect the reserves in a LNG market reality we are faced with in the next five years and failure to protect is not an option as Haiti beckons.
PLOTT has released today its “Crime analysis: a review of murders year to date 31-Mar-16. As at March 31, 2016 the murder rate was 113 murders with 77% of victims shot dead. The areas where the bodies of victims were found were as follows: 31% East POS, 27.4% East/East-West Corridor, 20.4% South, 12.4% Central and 5% West. When you aggregate the stats for South and Central the total is larger than that for East POS and for East/East-West Corridor (non-aggregated). The figure for South places it in the same league as East/East/West Corridor. The geography of murder is now changing and we now have three areas that are the murder zones of Trinidad and Central sandwiched between the Corridor and South will be impacted sending the rate in this area upwards. This reality must be visualised in the context of a detection rate of 3% to 9% in 2015. I have already on this blog posted on the changes in the trade/game that have influenced this change in geography. I have said enough. What are the politicians elected and non-elected doing to deal with this reality that is now past a crisis and in the realm of state failure?