By Andrew Smith, Staff ReporterREVERBERATIONS FROM the war drums being beaten by the United States are being felt all over the world. Jamaica, as a small island developing state (SIDS), is particularly vulnerable to the shock waves being generated by President George W. Bush. This is due to the fact that Jamaica relies on imported petroleum for 90 per cent of its energy needs.
Since the early 20th century oil has been the fuel which has driven economic development. In the post-colonial world, developing countries have exchanged reliance on the "Mother Country" with reliance on the global petroleum multinationals.
Jamaica utilises oil to process its own natural mineral and agricultural resources into products which will earn the country invaluable revenue. More expensive fuel will increase production costs and adversely affect the income generated from these sectors. Petroleum is also used for electricity generation, transportation and domestic uses. Electricity consumption is currently between 660 to 680 megawatts.
The country's energy policy was formulated "to diversify Jamaica's energy base with the aim of ensuring an adequate and secure energy supply for Jamaica". The question is, will Jamaica have an "adequate and secure energy supply" when war with Iraq starts? And if the supply is maintained what will the cost be?
Dr. Raymond Wright, managing director of the Petroleum Corporation of Jamaica (PCJ), has stated that Jamaica's "supply security of product and crude oil is fairly secure". In addition to obtaining oil from the traditional sources of Mexico and Venezuela, arrangements have also been made to obtain supplies from Ecuador. Dr. Wright expects a short war of approximately three weeks, during which local prices could pass the $30 per litre mark. This is in line with global trends, as last week motorists in the United States paid an all time high average price of US$1.72 per gallon.
After the war global, prices should fall and local gas prices should be affected accordingly. In fact, the price of Brent oil fell yesterday by 10 per cent. This is because the uncertainty which clouded the market over the last few months vanished with President Bush's ultimatum to President Hussein. Analysts believe that a war will occur quickly and finish rapidly.
