T&T has had a very rough 15 months but, to be hon­est, since 2015 our econ­o­my has sur­vived on bor­row­ing and draw­downs from the Her­itage and Sta­bil­i­sa­tion Fund to meet the short­falls in rev­enue.

The root of the prob­lem is fair­ly sim­ple. We have ex­pe­ri­enced a pe­ri­od of pro­longed low en­er­gy prices, low­er for longer as it is called in the en­er­gy sec­tor, and low­er pro­duc­tion lev­els. This has led to re­duced gov­ern­ment rev­enue and even though the Fi­nance Min­is­ter has clawed back spend­ing on the back of sim­ply not pay­ing bills and re­mov­ing the fu­el sub­sidy, we still have not brought in­to align­ment our ex­pen­di­ture and rev­enue.

For sure, the Min­is­ter of Fi­nance has been dealt a num­ber of poor cards: an econ­o­my that nev­er got val­ue for mon­ey, a pop­u­la­tion high on sub­si­dies and trans­fers, a po­lit­i­cal en­vi­ron­ment that en­cour­ages an eye on the next elec­tion for every de­ci­sion that is tak­en and add to that falling glob­al en­er­gy prices and low­er do­mes­tic pro­duc­tion and now Covid-19. The per­fect storm.

This al­so speaks to the struc­ture of the econ­o­my in which there is a co-re­la­tion be­tween the per­for­mance of the oil and gas sec­tor, off­shore econ­o­my, and the on­shore econ­o­my.

The on­shore econ­o­my de­pends heav­i­ly on the for­eign ex­change earn­ings of the oil and gas sec­tor to fu­el its abil­i­ty to pay for raw ma­te­ri­als in man­u­fac­tur­ing, for food and oth­er con­sumer im­ports if your busi­ness is in dis­tri­b­u­tion, and, of course, it’s a ma­jor source of gov­ern­ment rev­enue in an econ­o­my dom­i­nat­ed by the Gov­ern­ment and pub­lic spend­ing.

But even in the midst of the deaths and sick­ness that has gripped the coun­try in this lat­est spike of the virus, last week brought some hope to the coun­try. There ap­pears to be con­fi­dence by the ad­min­is­tra­tion that it can vac­ci­nate its way out of the pan­dem­ic hav­ing se­cured ma­jor amounts of jabs.

Oil and gas prices are on the rise and on Tues­day broke US$70 a bar­rel for the two ma­jor mark­ers, WTI and Brent. Nat­ur­al gas prices re­main rel­a­tive­ly buoy­ant in Eu­rope and Asia and petro­chem­i­cal prices are re­cov­er­ing.

Pro­duc­tion of nat­ur­al gas re­mains down but this week’s en­er­gy con­fer­ence has shown that the pro­duc­tion of both oil and gas are like­ly to grow sig­nif­i­cant­ly over the next 12 - 24 months. In short, things are look­ing bet­ter.

The glob­al econ­o­my is ex­pect­ed to pick up speed as coun­tries, start­ing with the lead­ing in­dus­tri­alised na­tions, emerge from lock­downs and de­mand quick­ens.

This is like­ly to lead to stronger en­er­gy prices and with the low­er lev­el of in­vest­ments we could very well see sus­tained good prices for oil, nat­ur­al gas and to a less­er ex­tent petro­chem­i­cals.

With T&T and the Caribbean aim­ing to al­so open back up by the first quar­ter of 2022, the signs are there, de­mand for man­u­fac­tur­ing goods will grow and could re­sult in stronger rev­enue streams for the coun­try.

You add to that pent-up de­mand, the re­open­ing of the econ­o­my and its im­pact on the dis­tri­b­u­tion sec­tor, schools re­open­ing and well you see the pic­ture.

These de­vel­op­ments point to some re­cov­ery in the lo­cal econ­o­my in 2022/2023 but we must not be lulled in­to any sense of com­fort and while I am sure the Gov­ern­ment will be tempt­ed and will like­ly use the ad­di­tion­al rev­enue to in­crease spend­ing it must on­ly be on projects that will lead to ei­ther greater ef­fi­cien­cy or cap­i­tal ex­pen­di­ture that will gen­er­ate rev­enue in­to the fu­ture

For sure the econ­o­my is still in a pre­car­i­ous po­si­tion. Pub­lic debt is now well over 80 per cent of GDP and the un­em­ploy­ment rate has in­creased with tens of thou­sands of peo­ple fur­loughed or hav­ing lost their jobs all to­geth­er.

Many small busi­ness­es and bars and restau­rants have been hard hit if not dec­i­mat­ed.

The T&T econ­o­my is at a point of in­flec­tion. We are faced with tough choic­es and while for decades we have been urged to di­ver­si­fy the econ­o­my, in oth­er words have mul­ti­ple sources of rev­enue oth­er than the en­er­gy sec­tor, we have not done it suc­cess­ful­ly.

If it were easy the num­ber of coun­tries over­ly de­pen­dent on one source of in­come would have sig­nif­i­cant­ly de­creased.

The in­vest­ments in the en­er­gy sec­tor and the rev­enue to ac­crue to the coun­try as a re­sult presents us with a short win­dow to make a ma­jor change in how we op­er­ate in T&T.

I agree with the Prime Min­is­ter that as a coun­try we still have a fu­ture in en­er­gy. That fu­ture how­ev­er has a lim­it­ed time to it and there­fore four things must hap­pen.

1 En­sure that steps are tak­en to tran­si­tion the en­er­gy sec­tor in­to one that can be rel­e­vant post 2050. How do we do that? Well we have to look at what ways we can earn rev­enue from the sig­nif­i­cant in­vest­ment we have in the ground and add val­ue to it. For ex­am­ple, green am­mo­nia and methanol could be pos­si­bil­i­ties, clean fu­el from methanol. Man­u­fac­tur­ing from de­riv­a­tives from the en­er­gy sec­tor like us­ing melamine as a build­ing block in the man­u­fac­tur­ing process.

2 En­sure the sec­tor is com­pet­i­tive: We have to be laser like fo­cused on the en­tire val­ue chain, in­clud­ing our fis­cal po­si­tion in the sec­tor so that we are aware that this is a ma­ture hy­dro­car­bon province, that com­pa­nies have a le­git­i­mate role to pro­vide their share­hold­ers with rea­son­able re­turns on their in­vest­ment and that all play­ers on the val­ue chain must ben­e­fit for it to work. Gre­go­ry McGuire has sug­gest­ed a mar­ket-based net back pric­ing mech­a­nism for the en­tire chain and that is an idea worth con­sid­er­ing.

3 We have to en­sure that we are do­ing the smart things in the way we utilise our state en­ter­pris­es. What has come of the plan to put back the re­fin­ery on the mar­ket for sale? What has come of the $500 mil­lion in­vest­ment in Train 1? Is Train 1 dead? Should the NGC have risked the cap­i­tal and how much of that an­nounced new gas is go­ing to Train 1 or the oth­er trains?

4 Pre­pare for life af­ter fos­sil fu­els. We know it is com­ing be­cause the in­flu­en­tial peo­ple of the world have made it their agen­da and be­cause the sci­ence tells us it is what needs to be done.

What hap­pens to T&T post 2050, in a mere 29 years or 2035 when it is ex­pect­ed in­vest­ments in hy­dro­car­bon will cease? That is in 14 years.

Are we go­ing to al­low our­selves to be lulled in­to be­liev­ing that the next two to three years of im­proved eco­nom­ic out­look will last and make us fail to trans­form the econ­o­my?

Will we fail the fu­ture gen­er­a­tion by prepar­ing them for ca­reers that no longer ex­ists or are we go­ing to be fooled in­to be­liev­ing the benev­o­lence of the state will be there from cra­dle to grave.

If we do, we have an­oth­er thing com­ing.