A review of the most recent Ryder Scott report on our natural gas reserves has been published via the print and electronic media. In a sentence, we have replaced the natural gas used over the last year or so by the same amount of proven reserves. If this resource is used at the present rate and with no new finds, it appears that we have 12-13 years of production left. However this is not the way natural gas finally depletes. With this depletion the production rate falls away, even faster than oil’s, though the depletion time exceeds the fixed production rate estimate. In other words long before the 12-13 year time estimate we would not be able to meet production demand.

GOTT’s view on our natural gas reserves has not changed. According to the Minister of Energy there is potential for more petroleum somewhere out there (which to him means that there is petroleum out there) and the only problem is one of cost, to explore and produce the resource. He sees that with the price of both oil and gas high, we should produce our resource as quickly as possible, which implies as many incentives as possible to get Big Oil in T&T to find the petroleum the Minister knows is there. He talks of this as a partnership in which we alleviate risk.

My concern is not whether we have 12-13 years or more reserves or whether we find more petroleum that is economically viable to produce. Instead it is indisputable that with a depleting resource someday it will be no more. When this day arrives the energy based economy of T&T will be no more. The concern raised by this observation is, what are we putting in place now to ensure that we build an economy based on reproducible capital given that restructuring an economy can take some two decades?

GOTT seems enamoured with Dubai and joyously reported that Dubai is interested in an investment in our proposed International Finance Centre (IFC). It is worth examining, if briefly, its history. Dubai was a poor fishing village, a desert city, known for its pearl exports. Oil was discovered in the emirate in 1966 and life there changed. But the Sheiks realised that oil is a depleting resource and when it peters out life would be brutish, a return to that of a fishing village. Thus, in the 1980’s Dubai began to use its oil wealth to provide reproducible capital assets that would continue to produce wealth long after the oil is gone. One vision was to make Dubai into a tourist playground for the rich. Another was the exploitation of the fundamental recognition that though the region was cash rich, cash is not, nor does it produce wealth- capital assets do. So Dubai started its IFC to primarily invest this regional cash into world class wealth generating assets. We are all aware of the massive bid Dubai made to purchase a series of ports in the US. We are all aware of Dubai’s 20% ownership of the US stock market, NASDAQ. We are all aware of Dubai’s recent science and technology project in which they are building a new city based on alternative energy to house its R&D effort into energy efficiency.

But there is another example which stands out- Singapore. At one time GDP/capita of Singapore was in general below that of the islands of the Caribbean. Today Singapore’s economy is among the highest in the world based on GDP/capita. What is it that made these two tiny countries into really world class tigers? So much so that we are asking one of them to come help us with our IFC, help us use this to diversify our economy into downstream energy.

The economic history of the region demonstrates forcibly to anyone willing to listen that foreign investment does not translate into economic development. The region was created by foreign investment- the plantation economy of tropical agriculture. Then foreign investment into petroleum in T&T and bauxite in Jamaica and elsewhere, changed the commodity bases of the plantation economies. In the good times we earned substantial rents from the exploitation of these natural resources, as did Dubai. But unlike Dubai we did not use these rents to restructure our economies into those that produce capital. The result is that today we are asking the help of a desert city which at the time of our independence was but a poor fishing village. The ingredient that Dubai and Singapore have that we are missing over the decades is enlightened political leadership, one concerned with the development of our societies as opposed to the exclusive task of maintaining political power. maryking@tstt.net.tt