Suzanne Shep­pard

The price of oil yes­ter­day slipped be­low the US$80 a bar­rel price on which T&T's na­tion­al bud­get is based. The drop in price came af­ter Gold­man Sachs, a lead­ing glob­al in­vest­ment bank­ing, se­cu­ri­ties and in­vest­ment man­age­ment firm, slashed its fore­cast for prices, pre­dict­ing that West Texas In­ter­me­di­ate (WTI) crude–the price of T&T's oil–will spend the bet­ter part of 2015 at US$75 a bar­rel.In ear­ly trad­ing on the New York Mer­can­tile Ex­change yes­ter­day, the price of WTI slid US$1.20, or 1.5 per cent, to US$79.79 a bar­rel. Brent crude on Lon­don's ICE Fu­tures ex­change dropped US$1.26, or 1.5 per cent, to US$84.88 a bar­rel.

WTI prices re­cov­ered slight­ly, end­ing the day at US$80.95 in New York trad­ing, while Brent crude, which is used by many US re­finer­ies, was at US$84.93 in Lon­don.Since June, oil prices have dropped steadi­ly from a high of US$107 a bar­rel. Gold­man Sachs was the lat­est Wall Street bank to low­er its fore­cast for oil prices, say­ing that Opec was un­like­ly to cut ex­ports to try and push prices back up.The bank's an­a­lysts are pre­dict­ing that WTI crude will av­er­age US$75 a bar­rel for the first quar­ter and sec­ond half of 2015, down near­ly 17 per cent from US$90 a bar­rel, pre­vi­ous­ly. They cut their Brent fore­cast by 15 per cent, to $85 a bar­rel, from $100 a bar­rel, pre­vi­ous­ly. The 2016 and long-term fore­casts for those oil prices are US$80 a bar­rel WTI and $90 a bar­rel for Brent.

In an im­me­di­ate re­sponse, Prime Min­is­ter Kam­la Per­sad-Bisses­sar yes­ter­day ex­pressed con­fi­dence that T&T's econ­o­my will not be ad­verse­ly af­fect­ed by the falling oil prices.

Speak­ing at a joint news con­fer­ence with To­ba­go House of As­sem­bly (THA) Chief Sec­re­tary Orville Lon­don at her St Clair Of­fice, Per­sad-Bisses­sar said Fi­nance Min­is­ter Lar­ry Howai had re­cent­ly re­port­ed to the Cab­i­net that the short­fall from re­duced oil prices will be made up in gas sales.She said Howai in­di­cat­ed that there was no need "to go in­to fur­ther deficit or to go in­to fur­ther bor­row­ings." Howai is ex­pect­ed to give a fur­ther up­date on the sit­u­a­tion to the Cab­i­net on Thurs­day."We are very op­ti­mistic that we can weath­er it, we can weath­er the storm. Should things change we will come back to the pub­lic at large (but) at this point we have been giv­en the as­sur­ance that we can sur­vive," Per­sad-Bisses­sar said.

Howai said last week that an ex­er­cise is al­ready in progress to ad­dress ex­pen­di­ture and it will be ac­cel­er­at­ed if the price of oil slips be­low the US$80 on which the 2014-2015 bud­get is based.He al­so ex­pressed the view that low­er oil prices will not be a "pro­longed sit­u­a­tion", sug­gest­ing that there will not be need for con­cern un­less "the price of gas and re­lat­ed de­riv­a­tive com­modi­ties al­so show a sig­nif­i­cant de­cline."The min­is­ter told the T&T Guardian that the min­istry will close­ly mon­i­tor the price of oil but Gov­ern­ment's re­sponse will de­pend on whether the re­duc­tion in oil price is pro­longed and there is a change in gas prices.Howai ex­plained that gas prices make a big­ger con­tri­bu­tion to T&T's bud­get­ed rev­enues than oil and that has been "so far par­tial­ly off­set­ting the ef­fects of low­er oil prices."

–With ad­di­tion­al re­port­ing by Richard Lord