Rapheal John-Lall

The En­er­gy Cham­ber of T&T is call­ing on the coun­try to "plan ac­cord­ing­ly" as oil prices con­tin­ue to tum­ble. He made the call yes­ter­day as oil prices fell to a fresh six-year low. The lat­est de­cline was trig­gered by da­ta which showed a sur­prise in­crease in US stock­piles, adding to a mas­sive glut of crude around the globe. West Texas In­ter­me­di­ate (WTI), which trades slight­ly high­er than the crudes pro­duced lo­cal­ly, fell to US$40.80 a bar­rel in New York, their low­est close since March 2, 2009.

The cur­rent price is well be­low the US$45 a bar­rel price on which the na­tion­al bud­get is pegged and has giv­en rise to con­cerns about how the re­sult­ing sharp drop in rev­enue from oil will af­fect T&T's econ­o­my. Fi­nance Min­is­ter Lar­ry Howai said Gov­ern­ment has been mon­i­tor­ing the mat­ter very close­ly. "The over­all fis­cal po­si­tion has been bet­ter than ex­pect­ed for the first nine months of the fi­nan­cial year and we shall re­lease that da­ta over the next cou­ple of days.

The bet­ter per­for­mance has come from low­er lev­els of ex­pen­di­ture and bet­ter than ex­pect­ed gas prices. "The Min­istry of Fi­nance has worked sev­er­al sce­nar­ios and con­sid­ered as many op­tions for ad­dress­ing this mat­ter of falling oil prices. "As you would be aware the Min­istry does not ad­just pol­i­cy on the ba­sis of dai­ly price move­ments but in the con­text of longer term ex­pec­ta­tions for prices but it goes with­out say­ing that fur­ther ad­just­ments will have to be made if prices fall be­low US$40 for an ex­tend­ed pe­ri­od," he said.

"At the mo­ment, the Fu­tures mar­ket re­flects a po­ten­tial re­cov­ery in the com­ing months to about US$50. We are not san­guine about this and have been us­ing much more con­ser­v­a­tive num­bers in prepar­ing next year's na­tion­al bud­get. You can be as­sured that this mat­ter will be the sub­ject of con­tin­u­ing very close at­ten­tion by the min­istry in the com­ing months."

In a state­ment yes­ter­day, the En­er­gy Cham­ber de­scribed the falling en­er­gy prices as a source of con­cern: "The fall in oil prices is ob­vi­ous­ly a ma­jor con­cern for the in­dus­try, and should be a ma­jor con­cern for all of the cit­i­zens of Trinidad and To­ba­go. "The oil and gas in­dus­try is the dri­ving force of our econ­o­my and rep­re­sents the ma­jor source of Gov­ern­ment rev­enue and of for­eign cur­ren­cy.

While we can­not pre­dict fu­ture prices, as a coun­try we need to be very aware of the risk that prices will re­main low in the medi­um- term and we must plan ac­cord­ing­ly." Al­so com­ment­ing on the lat­est price drop was Uni­ver­si­ty of the West In­dies (UWI) econ­o­mist Dr Roger Ho­sein told the T&T Guardian there was need for cau­tion by po­lit­i­cal lead­ers and care­ful man­age­ment.

"Pol­i­cy mak­ers will need to care­ful­ly de­cide on ex­pen­di­ture cut­ting strate­gies and av­enues to in­crease rev­enue flows in the non oil sec­tor. The econ­o­my is in a new nor­mal and there is now a height­ened need for wis­er eco­nom­ic de­ci­sion mak­ing," he said. Busi­ness­man Abrahim Ali, a for­mer Pres­i­dent of the San Juan Busi­ness As­so­ci­a­tion, said the coun­try should have been wor­ried about the falling oil prices a long time ago.

"Some peo­ple have been say­ing that we are now a gas based econ­o­my but gas prices have al­so been low. I do not think that the cur­rent en­er­gy prices could sus­tain the re­cur­rent ex­pen­di­ture of the coun­try," he said. Ali said past and present gov­ern­ments have cre­at­ed a "wel­fare state" where peo­ple ex­pect free hand­outs. In times of low en­er­gy prices this is not sus­tain­able. "Who­ev­er forms the next gov­ern­ment, they have a lot of work to do. We may even see in­creased tax­es to make up for the short­falls in rev­enues," he said.