Barbados,
Grenada and Jamaica most vulnerable to price surge
Caribbean
News
Port Spain
Petroleumworld.com
06 18 06
Port
of Spain Trinidad June 13: Trinidad Guardian has
reported that with price of oil projected to rise
above its current US$70 per barrel cost, Barbados,
Belize, Grenada and Jamaica have been pegged as
countries most vulnerable to a price surge. This
is according to a report from leading global investment
banking, securities trading and brokerage firm,
Bear Stearns.
The report looked at how small countries in Central
America and the Caribbean are currently coping with
the high oil price.
The
study focused on Barbados, Belize, Costa Rica, the
Dominican Republic, El Salvador, Grenada, Guatemala,
Jamaica and Panama.
The
report tackles how the oil price is affecting inflation,
political decision making and balance of payment
accounts in the region. And how governments plan
to cope with the current high oil price and the
prospect of the price rising to US$100 per barrel
is also examined.
According
to the report, most policymakers in the region had
a laissez-faire approach to the spike in oil prices
over the past four years and viewed the increase
as short term.
"We
believe that policymakers have few, if any, contingency
plans for a sudden spike in oil prices, to say,
US$100 per barrel. Most are just hoping it doesn't
happen," the report said.
Oil
prices for 2006 have been 15 to 20 per cent higher
than the 2005 average.
Over
the past four years, the oil price surge caused
not only a higher import bill but also lowered real
disposable income.
In
the report, Bear Stearns estimates that with continuing
tensions in the Persian Gulf and a higher demand
for oil in China and India, oil prices were more
likely to rise than fall.
The
impact of oil prices on the inflation rates in the
region is not cause for concern in regards to creditworthiness
or macroeconomic policy management, the report said.
But
Bear Stearns did not completely rule out the role
of oil prices in inflation.
"Most
of the increment in inflation rates in 2005 can
be accounted for by oil. These countries are not
particularly large consumers of other products,"
the report observed.
Apart
from inflation, Bear Stearns noted that the oil
bill was pivotal when reviewing the current account
of the balance of payments for Caribbean countries.
For
instance, in Jamaica, due to the price of oil their
current account deficit nearly doubled in 2005,
the report added.
In
fact, the report also projected how the Caribbean
countries' current account balance would be affected
with a US$100 per barrel price of oil in 2007.
Caribbean
News
June
13, 2006
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