Higher
energy revenue on the horizon
Port Spain
Petroleumworldtt.com
11 04 07
Oil prices have hit the record high of US$90 per
barrel spurring global attention. But how does
this affect oil producing Trinidad and Tobago.
Financial experts have cautioned that when oil
prices rise, so does everything else.
Plastics, freight prices and air fare topped the
lists of items which are likely to become more
expensive if the oil price hike continues.
And it is predicted that it can. Some even say
that the possibility of oil priced at US$100 per
barrel is more than just a possibility.
Local economists have said there are several ways
which not only Trinidad and Tobago but the Caribbean
region will pay for this high rise.
Prominent
economist Danayshar Mahabir said, "The
disposable income of many other Caricom countries
who are not oil produces will be decreased as they
fork out more money for fuel. Freight charges will
increase and the price of imported products will
be affected."
Jwala Rambaran
Financial analysts also have been saying the end
of cheap oil means the end of cheap imports for
countries which import a large percentage of their
consumer goods and services.
Mahabir said the recent increases are linked to
insecurities and predictions of shortages on the
international market but by the end of the next
three months these fears that the developed world
has been anticipating will show themselves to be
either real or imagined and therefore prices will
steady as the major gas consumers see where they
stand.
"But
in the meantime there will be fluctuations between
$60 and $80."
He said, however this country's revenues will
not be affected negatively as even a price of $60
per barrel would ensure the planned budget could
be carried out to its full capacity.
"The price hike will also put excess revenue
into the Government's hands," he said.
Like Mahabir, another economist, Jwala Rambaran
admitted that the excess revenue could have both
good and bad effects on the local economy.
He
said, "If a lot of the excess is spent
by the Government then inflation will sky rocket,
however they have said 60 per cent of excess revenue
will go into the Heritage and Stabilisation Fund,
so it all boils down to how fast they spend the
next 40 per cent."
Mahabir said citizens should note, however that
higher prices do not automatically translate into
a larger sum of cash for the Government as factors
within the oil and gas taxation regime also will
play a huge role on how much of the money actually
goes to the Government and how much goes back to
the multinational energy companies who carry out
exploration and production.
Both men agreed that any government who comes
into power after the November 5 general elections
will be in a position where they must decide how
and when excess oil revenue would be spent.
"And they should articulate it to the public
because their spending affects inflation for us
all in Trinidad and Tobago," added Mahabir.
Story
by Aretha Welch from
Trinidad Express
Trinidad
Express
Wednesday, October 31st 2007
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