The good news reported from the Director-General of the Planning Institute of Jamaica (PIOJ), Dr. Wesley Hughes, is that the economy has passed the recovery stage and is on a growth path. The bad news is that the rising cost of oil is a dark cloud on the horizon even though Dr. Hughes said, "we are still hopeful", when asked if that prospect might affect the Government's target of single-digit inflation for the fiscal year.
Finance Minister Omar Davies had raised the issue of the country's energy bill when he opened the Budget Debate in mid-April. He told Parliament it was the major factor impacting on the country's balance of payments since the original forecast for fiscal year 2004/05 assumed an average oil price of US$30 per barrel - or an oil bill of just under US$850 million. Oil prices this week reached record highs of over US$41 per barrel on world markets.
The obvious counter to this trend is conservation. But as Dr. Davies pointed out, the measures now in place will not suffice. Neither tourism, bauxite nor any other export sector can grow at a rate to compensate for the possible increases in the oil import bill. That reality must be weighed against the conservation efforts that have been made in the past. Apart from some success in the bauxite/alumina sector, where energy usage is heavy, little progress has been made.
Jamaica lags substantially behind developed countries in the efficiency achieved in this area. The most obvious symbol of this is the large number of sports utility vehicles being used throughout the country. They have become the preferred status symbols of those who can afford them; and they guzzle gasolene.
While the official car import policy favours vehicles with smaller engines, that policy is divorced from the changes now under way in the automotive industry where very efficient diesel and gasolene engines have been developed.
Energy conservation requires a national effort, such as those that were incorporated in the architecture of the Petroleum Corporation of Jamaica headquarters, to minimise energy use.
High oil prices cause a massive drain on the country's wealth. It is counter-productive, for example, to earn an extra $100 million from tourism and then pay out the same amount to import oil. The days of cheap oil are behind us. Petroleum prices will rise and fall, but the global reserves are being depleted so there is expected to be a general upward trend in prices in the future.
Jamaica has renewable resources in wind as at the newly developed Wigton wind farm, hydroelectricity, solar energy and biomass. But the quickest route is conservation for which the most efficient stimulant is price. That is why Minister Davies has called for a joint effort on a realistic energy policy, taking account of the potential damage of sharp price movements on every aspect of national life. Jamaicans must set on board the conservation train.
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