Apr 03, 2020 Editorial
It could be safely said that this year is lost, relative to upward price flows and benefits. This is what we say. It should take a while to recover from raging global virus effects, which still has not peaked. Depressed demand is the order of the day from social lockdown and prevailing economic stringencies. The local outlook is grim.
The only thing left to curse this oil of ours is for some development, technology, product that weans and strips away at the hold of crude oil on this 21st century world of ours. Whatever it is could render that oil of ours useless.
Oil could be our next sugar. Once the latter was all about being the lifeblood, then it transformed into bad blood, bad feelings, and bad memories. For sugar is now non-competitive, and with that lots of homes and hopes, lots of hearts overwhelmed. This bottom line is incontestable: production cannot continue uninterrupted, when costs are above market price. That was the death knell of Guyana’s sugar, and with that the dirge of family, community, and large swaths of this society. That is now forever of our simmering history.
By the same measurement, this oil of ours could be subjected to the severest of tests, which has nothing to do with local politics, geopolitics, or petroleum politics. In the plainest language, it has to do with market conditions, market forces, and market prices. The same standard applies here as in anywhere else: if an entity, or a country, cannot produce at even the breakeven price, while it hopes and waits, for the usual market turnaround, then it has a problem with what was once its fabled treasure in the ground, its dreams that did not come true, and which ended up being an albatross hanging around the national neck and bending double the whole body.
It is not worth the combined expenses of producing, transporting, and marketing in the hope of selling for something that recoups some of the sunk costs, that adds to the plus side of the treasury. If anyone has heard, or knows, of any country that subsidizes its oil sector, then some sharing of that story would be welcomed. It is just not done, not at the country level, or at the corporate one.
Separately, there is news making the rounds that the Russians are moving on new oil fields, which is the Arctic frontier. It is vast and could yield countless times of our own known discoveries. That is a lot of oil, which means a lot of supply, which translates to lots of price action. Unless husbanded wisely or used to brandish ideological or commercial supremacy, then the mere announcement, the barebones news of the arrival of some of that extraordinary cargo could wreak havoc with markets and prices. Now where would Guyana be at that point and after all of the fighting and clashing and undermining that have occurred here in an endless litany of the unthinking and the national unraveling?
Chevron had come up with something sophisticated (or at least a cut above what existed) towards the end of the 20th century in its explorations of untapped Venezuelan oil basins. Authoritative reports have made that basin into the biggest in the world. Now take Arctic oil and Venezuelan oil (both incomparable and mindboggling in the quantity possessed), and then add some new finds in those other locales where feverish efforts are in motion to uncover new reservoirs, and the once gloriously sunny outlook for Guyana oil suddenly takes on the Stygian gloom of a world living under an unending eclipse.
Now some of this is down the road, as in a couple of years. Those years could be a lifetime, or they could be as near as tomorrow. Perhaps, we would continue to be engaged and consumed with wrangling and fighting and tabulating, with claims of who is cheating and who did lay the table to cheat from the inception. The stark reality still remains: the oil is there, but it is not worth the effort and economics of carrying it away.
What is worth fighting for when these are the times and possible places that this oil could take us?
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