Martin HenryIRONICALLY, AROUND the same time that the Petroleum Corporation of Jamaica was proudly running full-page advertisements celebrating its 25th anniversary, the Minister for Energy, Phillip Paulwell, was gravely announcing measures to respond to the crisis of rising oil prices. In the Sectoral Debate, the Minister intoned that "it is totally unsatisfactory that only 10 per cent of the economy's total energy requirement and five per cent of the electricity are provided by renewable resources."
Finance Minister, Dr. Omar Davies, with eyes glued to a gaping Budget deficit refusing to shrink, has calculated that if the price of oil averages US$33.40 per barrel over 2004, oil imports will cost a further US$69 million ($4.2 billion) moving the current account deficit to US$950 million, 10.6 per cent of GDP. No sooner had he put down his calculator than the price of oil shot past the US$40 barrier, the highest in over two decades, and has kept climbing with no levelling off in sight. It would be a miracle if average price does not exceed Davies' danger benchmark.
There are many factors driving prices up, but there is really no absolute shortage in the world. One price-pumping factor which isn't about to go away any time soon is surging demand from the Chinese growth machine economy which in human numbers is the largest in the world and is just breaking free as it gobbles oil and steel and other world resources. Traders are predicting that China's fuel demand will keep growing at least for the next two to three years. So high oil prices are here to stay.
ENERGY CRISIS
Chinese oil demand looks set to rise about 20 per cent in the first half of this year, says the International Energy Agency. So as prices move up daily, we are frightened into "initiatives to combat energy woes": the establishment of an Energy Efficiency Unit, the appointment of an Energy Co-ordinators Committee, bringing wind farms, fuel wood production, greater use of solar energy and hydro-power on stream, distribution of compact fluorescent lamps, training in energy efficiency and conservation, establishing a revolving Energy Trust Fund, running a public awareness campaign for behavioural change in energy consumption, introducing legislation for energy efficiency in the building code.
We have been there, done that when we were equally frightened by the oil shock of the 1970s. So much of Jamaica's subsequent poor economic performance has been blamed on that infamous shock. The government of the day created a Petroleum Corporation of Jamaica in response to rising oil prices and the threat posed to the Jamaican economy. The PCJ was to push energy efficiency and conservation, prospect for oil, develop alternative energy resources, and manage our oil imports particularly under the generous San José Accord, which saw our oil-rich Caribbean neighbours, Venezuela and Mexico, giving us a bailout.
In its halcyon days the PCJ had one of the finest and largest teams of scientists ever assembled in Jamaica, working on energy problems and related environmental conservation problems. Profits from successful management of San José Accord oil fuelled a high-energy energy diversification programme. We didn't find oil, peat didn't quite work out, but a lot of extremely useful work was done. The PCJ has been reduced to a shadow of its former self. Except for its fine energy-efficient headquarters prominently sitting on Trafalgar Road in New Kingston in which Paulwell's Ministry resides, the corporation is hardly seen, heard or known.
QUESTIONABLE RELEVANCE
To anyone who has tracked its promising start and its early output, its 25th anniversary public relations advertisement rings hollow: "The Petroleum Corporation of Jamaica has been in the forefront of energy conservation and environmental protection. PCJ has implemented several energy-saving programmes and is making substantial investments in renewable energy resources.
The PCJ is positioning Jamaica to utilise cheaper and more efficient sources of energy which will reduce the nation's reliance on oil." Another oil crisis has caught us without LNG (liquefied natural gas) cheaper and cleaner without robust alternative energy resources, and without a serious efficiency and conservation programme.
Let's not fool ourselves - we are going to be petroleum-dependent like everybody else in the world for a long time. And since we haven't got it, we shall have to import it for what it is sold by those who have it. But surely we do not need to remain stuck at 90 per cent of the energy mix being oil and we don't need to waste it as terribly as we are doing. We have wind, solar, some hydro prospects and lots of potential for biomass. And most of all we could have long ago pushed up efficiency and conservation through an innovative mix of legislative, taxation, pricing and incentives levers. A reduction of the oil bill by even a meagre 10 per cent represents massive dollar savings.
Every incandescent bulb and non-solar water heater in the country is a blow to energy efficiency. So is every building totally dependent on artificial lighting and cooling. Every five-seater route taxi where a 20-seater bus could operate is a waste of energy. Every truck hauling goods cross-country which belong on a railway is a waste and every NWC leak. And the list goes on. Rising energy costs are set to push up the costs of all goods and services, to derail a public sector Memorandum of Understanding between Government and the trade unions, and perhaps derail an entire economy.
We can do nothing about rising oil prices; we could have done a lot more over the last 25 years to cushion its effects instead of undoing initiatives which are now being launched all over again for the same old reason.
Martin Henry is a communication specialist.
