T&T is no longer the jew­el of the Caribbean. De­scribed as a nat­ur­al gas econ­o­my as it has more gas re­serves than oil. In 2014 en­er­gy prices fell pre­cip­i­tous­ly leav­ing a hole in gov­ern­ment rev­enues that re­mains un­plugged sev­en years lat­er. Prices re­main de­pressed, de­spite some short-term up­ward move­ment. En­er­gy out­put vol­umes have al­so de­clined. Dai­ly nat­ur­al gas pro­duc­tion for the pe­ri­od Sep­tem­ber to No­vem­ber 2020 av­er­aged 2.6 bil­lion cu­bic feet (bcf), down from 3.5 bcf in 2019, 3.6 bcf in 2018, and a high point of 4.2 bcf in 2011. Ap­prox­i­mate­ly 50 per cent of the petro­chem­i­cal plants in Pt Lisas es­tate are now closed or “tem­porar­i­ly shut­tered”.

These are alarm­ing de­vel­op­ments, ex­ac­er­bat­ed by the per­sis­tence of COVID-19 and the prospect that the pan­dem­ic will con­tin­ue to dis­rupt economies by the so­cial dis­tanc­ing mea­sures adopt­ed to con­tain the spread of the virus. The US En­er­gy In­for­ma­tion Ad­min­is­tra­tion (EIA) in its 2021 short-term out­look pub­lished on Jan­u­ary 29 es­ti­mates that the world con­sumed 92.2 mil­lion bar­rels per day of pe­tro­le­um and oth­er liq­uid fu­els in 2020, a nine per cent de­cline from the pre­vi­ous year and the largest de­cline in EIA’s se­ries that dates to 1980.

That out­look projects in­creas­ing US nat­ur­al gas pro­duc­tion at a faster rate than con­sump­tion. Con­sump­tion is ex­pect­ed to re­main steady for the next ten years be­cause of slow­ing or slow­er in­dus­tri­al growth and will be used large­ly in en­er­gy gen­er­a­tion. The EIA projects that this will lead to a growth in US ex­ports of nat­ur­al gas. This has tremen­dous im­pli­ca­tions for the prices at which nat­ur­al gas will be trad­ed on world mar­kets.

Con­tem­po­ra­ne­ous­ly with this de­vel­op­ment, in­vest­ment in re­new­able en­er­gy gen­er­at­ing ca­pac­i­ty (so­lar pow­er, wind tur­bines) is ex­pect­ed to in­crease un­til it ac­counts for ap­prox­i­mate­ly 50 per cent of all pow­er gen­er­a­tion in 2050.

Re­cent­ly an­nounced in­vest­ment de­ci­sions by ma­jor cor­po­ra­tions give cre­dence to this out­look. Both BP and Shell, glob­al en­er­gy lead­ers, have planned to in­crease their in­vest­ments in re­new­able en­er­gy over the next decade. Gen­er­al Mo­tors has pledged to stop mak­ing gaso­line-pow­ered pas­sen­ger cars, vans, and sport util­i­ty ve­hi­cles by 2035, mark­ing a his­toric turn­ing point for the icon­ic Amer­i­can car­mak­er and promis­ing a fu­ture of new elec­tric ve­hi­cles for Amer­i­can mo­torists. Toy­ota in De­cem­ber 2020 un­veiled its plans for its en­try in­to the elec­tric ve­hi­cle mar­ket.

These de­vel­op­ments have im­por­tant im­pli­ca­tions for T&T’s eco­nom­ic fu­ture. They warn that the coun­try can­not de­pend on in­come from the oil and gas sec­tor to dri­ve the econ­o­my in the fu­ture and that ex­port earn­ings from new dif­fer­ent sec­tors are re­quired. This is a sim­ple state­ment that has enor­mous pol­i­cy im­pli­ca­tions.

T&T’s cur­rent eco­nom­ic growth mod­el is pred­i­cat­ed on con­tin­ued for­eign di­rect in­vest­ment in the en­er­gy sec­tor, the en­gine of growth. To drill new ex­plo­ration wells, set up new plants and gen­er­al­ly dri­ve eco­nom­ic ac­tiv­i­ty. In this mod­el, 80 per cent of T&T’s for­eign cur­ren­cy is earned by the en­er­gy sec­tor. Every­thing else op­er­ates on en­er­gy’s shoul­ders. To main­tain its stan­dard of liv­ing, T&T must ex­port to earn for­eign ex­change. If the en­er­gy sec­tor is de­clin­ing or its prospects lim­it­ed, what sec­tors will com­pen­sate for this de­cline? This is the crux of the di­ver­si­fi­ca­tion ar­gu­ment.

The cha­rade of the Petrotrin re­fin­ery sale process ex­em­pli­fies this co­nun­drum. There is no re­al­is­tic buy­er in sight. Hence the pro­tract­ed dance with Pa­tri­ot­ic/OW­TU. Giv­en the fall in fu­el de­mand, many re­finer­ies around the world are in trou­ble or for sale, and buy­ers have the up­per hand. In Par­lia­ment on Jan­u­ary 19, 2021, the en­er­gy min­is­ter stum­bled over a sim­ple LPG (cook­ing gas) pric­ing de­ci­sion. His con­fu­sion ex­em­pli­fied the pri­ma­cy of po­lit­i­cal cal­cu­la­tion, the avoid­ance of any de­ci­sion that could af­fect re­tain­ing po­lit­i­cal of­fice. How is he go­ing to re­solve the more com­plex busi­ness of sort­ing out the gas pric­ing is­sue in the petro­chem­i­cal sec­tor?

The fi­nance min­is­ter has re­cent­ly changed his tone. Gone is the heady “op­ti­mism” of a quick turn­around in en­er­gy prices or in­creased gas out­put. The Drag­on and Man­a­tee gas fields are stuck in the im­broglio of Venezuela’s pol­i­tics, do­mes­tic and in­ter­na­tion­al. New T&T finds when brought on stream in 2024/5 will not have the in­tend­ed ef­fect. The debt ra­tio is over 80 per cent and bor­row­ing more ac­cel­er­ates the cer­tain­ty of an IMF pro­gramme. He can­not plug the holes in the bud­get by bor­row­ing for­ev­er.

The ob­jec­tive re­al­i­ty re­quires a new par­a­digm, a more proac­tive ap­proach in part­ner­ship with the pri­vate sec­tor. The ease of do­ing busi­ness in­di­ca­tors are not im­prov­ing and nei­ther is pri­vate sec­tor in­vest­ment. Hu­man cap­i­tal does not rust; it em­i­grates. Fis­cal in­cen­tives which di­rect in­vest­ment to re­al es­tate can­not dri­ve the long-term de­vel­op­ment needs of the coun­try. Nor can state en­ter­pris­es dri­ve the econ­o­my’s growth. The fate of Petrotrin ex­em­pli­fies the State’s in­ca­pac­i­ty to man­age busi­ness­es with a prof­it mo­tive.

The coun­try is look­ing back, not for­ward, want­i­ng to recre­ate its past. In­di­ra Gand­hi, for­mer prime min­is­ter of In­dia put it sim­ply…“A na­tion’s strength ul­ti­mate­ly con­sists in what it can do on its own, and not in what it can bor­row from oth­ers.” A na­tion is not a gov­ern­ment, and de­vel­op­ing that strength re­quires peo­ple en­gage­ment.