Ja: Rastafari nations worry bad 'bout oil

Caribbean nations concerned that jump in oil prices may cripple economic recovery
by David Jessop
Sunday, June 13, 2004

FOR the last two weeks I have been confined to home with a minor, but painful, leg injury that requires rest. It is a slightly unnerving experience, mitigated only by escape from the tyranny of travel and meetings. More practically, it has provided me the opportunity to catch up on many unread papers and reports, normally reserved for transatlantic flights and to consider rather than skim, news from around the region.

What emerged from some of my reading is the enormous challenge now facing the region over the continuing high cost of energy.

Over the last month, oil prices have reached over US$40 per barrel.

With the exception of Trinidad, all Caribbean nations are now concerned that the recent huge leap in oil prices may seriously damage economic recovery and plans to adjust economies in preparation for the changes that will inevitably come as a result of trade liberalisation.

There is also uncertainty over the stability of Saudi Arabia; continuing US purchases of oil for its strategic stock pile; insufficient global refining capacity and soaring demand from China and India as their development programmes accelerate, pushing demand beyond present levels of supply.

Statistics suggest that this is not a short-term phenomenon. Although the factors affecting the global energy balance are complex, some sources suggest that global oil demand is estimated to continue to increase from present levels of around 79m barrels per day to 118m bpd by 2025. However, production is not expected to peak until 2020 with the possibility of prices increasing to as much as $51 per barrel being forecast during that period.

The implication is that, irrespective of speculations, energy prices significantly higher than those that have prevailed in the recent past will become the norm, and the Caribbean will have to adapt.

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Pretty good stuff from the Jamaica Observer, although I have a bit more faith that supply will figure out how much demand requires. The market will sort it out but for political considerations...and those considerations are bubblin' crude in this post 9/11 world.

It's no wonder Caribbean leaders are slavering over Castro and Chavez. They must know that US interests are far less likely to be so petty as to punish the region for geopolitical reasons...We don't have that "economy of scale"...But they must be rather less sure with Venezuela swinging the regional supply cudgel...possibly to be joined by Cuba.

Unfortunately such prostration will only further empower this emerging Marxist oil axis.

What causes me concern is the back-slapping affection between Chavez and sundry terrorists from Columbia to Iran.