Opinion
- Editorial
BG View :
Is oil choking us?
Business Guardian: From the Editor
Last
week’s BG View, headlined “What gives
us our edge” generated many responses: most
of which were useful and some of which actually
involved some thought.
An
attorney wrote that the question of where T&T
would be without Point Lisas—first raised
on December 8 and again last week—had not
been answered because it is was “with respect,
an unfair question.” It was an unfair question
because it dealt with absolutes whereas what we
are dealing with, in reality, is relatives, he argued.
An
attorney questioned “whether sufficient investigation
has been made of the environmental impact of Point
Lisas that will allow Trinidad to plan future industrialisation
that better strikes the balance between it and environmental
protection.”
As
far as the attorney was aware, most of the foreign
investors here “generally subscribe to the
precautionary principle of environmental practice—that
is if the environmental effect of an activity is
not known or is uncertain—then that activity
ought not to be pursued.”
The
problem, according to the attorney, was not with
the foreign investors, but on the local side and,
more particularly, with large-scale government-sponsored
activities such as the destruction of the hill above
Water Hole in Cocorite.
I
responded to the attorney by asking whether Point
Lisas was really an environmental problem if most
of the tenants there—23 out of 24—accepted
the precautionary principle of environmental practice.
In
a column headlined, “Our brains are our edge,”
commentator Mary King acknowledged the difficulty
of competing with India in IT and outsourcing and
with China in manufacturing.
Her
solution was that T&T “should not attempt
head-on competition with India or China,”
but that T&T should use our brains to create
niches such as the high-price clothing market or
the retention of product design and the outsourcing
of product manufacture.
King
recommended the institutionalisation of innovation
which would “dramatically improve the productivity
of the rest of us” not directly involved in
energy sector employment “in the creation
of tradable goods and services.”
In
response to King, I pointed out that T&T’s
education system does not promote innovation and
questioned whether there was any evidence that our
business class (including banks, businessmen and
investors) was willing to fund innovation in the
way the US business class does?
I
cited the case of pan, invented here 60 years ago
but patented in the US, asking King in an e-mail
whether, in that 60-year period, there had ever
been any evidence of any private sector initiative
to fund the development of what is supposed to be
the national instrument?
Arguing
a similar position to King about the need to foster
innovation in T&T was an e-mail writer who used
the name Sue Couyant.
Like
King, Couyant stated that the oil industry creates
relatively few jobs and even fewer spinoff industries.
This
means that T&T’s energy sector has “created
a way of life which has destroyed the regard for
education and the cultivation of initiative.”
According
to Couyant, the point is that “the political
economy of oil has killed the possibilities of sustainable
industry.”
The
argument was that were it not for oil and natural
gas, T&T could have explored possibilities in
the last 50 years of research into food processing,
in particular, Trinidad cocoa and alternative fuels
from sugar.
My
response on that point was that if one argued that
oil was underdeveloping T&T’s economy,
one would be left to conclude that the only way
to have the possibility of sustainable industry
would be to kill off the oil industry.
Responding
by fax, E Yee Ken of Carapo Village argued that
“we should subsidise agriculture and protect
it with tariffs also (if necessary, on the basis
of unfair trading practices in EU and US).”
ER,
a frequent letter writer wrote, inter alia, that
the rig visit two Fridays ago “was excellent
PR for BP” and questioned whether we are not
selling off our resources too cheaply.
I
e-mailed ER reminding him that companies were in
business to make a profit.
I
argued that the reason chose to invest the US$70
million in the Ibis Deep rig was because it expected
to make a return on its investment—even if
the odds of finding gas are only 35 per cent.
I
pointed out that we would not need the BPs, BGs
and EOGs of this world if we had local companies
with the requisite competence and the very deep
pockets to invest US$70 million on the basis of
a 65 per cent chance that nothing would be found.
If
one accepts that there is a three- to five-year
gap between exploration for hydrocarbons and production
of it, conceivably there could be a ten-year gap
between the identification of the asset and a return
on it.
It
is important to note that the same return on investment
principle should work for the State. Sometimes this
is more difficult to define because it may include
jobs and development in rural areas.
The
State also has a clear responsibility to ensure
that the returns on its investment (tax revenue,
primarily) are commensurate with the risk and in
keeping with its expenditure scenarios.
On
the issue of competence, I pointed out two things
to ER:
1)
The Ibis Deep rig was in an EOG Resources field.
For whatever reason, EOG decided that they would
farm the exploration out to BP. It could be that
they did not have the capital at hand (quite unlikely
in a time of US$70 a barrel oil prices) or they
felt they did not have the competence.
2)
The Ibis Deep rig is in the SECC (South East Coast
Consortium), where state-owned oil companies had
an unfortunate, but very costly, accident in 1991.
I
am very interested in hearing from readers on these
issues.
The
Business Guardian is
the Trinidad Guardian weekly Business edition.
Petroleumworld not necessarily share these views.
Editor's
Note: This commentary was published by Trinidad
Guardian, on
Thursday, July 6, 2006 , Petroleumworld reprint
this article in the interest of our readers.
All
comments posted and published on Petroleumworld,
do not reflect either for or against the opinion
expressed in the comment as an endorsement of Petroleumworld.
All comments expressed are private comments and
do not necessary reflect the view of this website.
All comments are posted and published without liability
to Petroleumworld.
Petroleumworld encourages persons to reproduce,
reprint, or broadcast Petroleumworld Editorial articles
provided that any such reproduction identify the
original source, http://www.petroleumworld.com and
it is done within the fair use as provided for in
section 107 of the US Copyright Law
Internet web links to http://www.petroleumworld.com
are appreciated.
Petroleumworld
07 09 06
Copyright
© 2006 Trinidad
Guardian .
All rights reserved
