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OIL WILL NOT SAVE US

Aug 15, 2017 Editorial, Features / Columnists

Today we continue to focus on a very important topic that should be of interest to every citizen of Guyana. It is about the recently announced discoveries of more oil by Exxon Mobil and what this means for our country and its people.
To the best of our knowledge, Exxon has stated that the pumping of oil will commence in 2020 – the same year of our scheduled general elections. It means that the oil will be monetized six years after it has been discovered, and it seems that many are hoping that the oil revenue would translate into major social and economic development for the people. But will it happen?
While the country welcomes the news of the major oil find, which according to Exxon Mobil should be approximately in the tens of millions of gallons from the Liza One and Liza Two oil wells and more recently from the Snoek oil well, the government should guard against being lulled into complacency. And it should not be naive in believing that the revenue generated from oil will end all of the country’s current financial woes.
Although the prospects seem quite favourable with the announcement that Guyana would receive 50 percent of the profit from oil, the government is making a terrible mistake by counting its chickens before they are hatched. Several experts have suggested that unforeseen problems could arise that could affect the scheduled pumping of oil in 2020. One of those problems could be changes in market conditions that could affect the project plans and the
overall schedule. Two, price levels for oil on the global market could in the medium and long-term reduce and thus affect the outcome of future exploration and development efforts.
For decades, Guyana has remained dependent on a single-commodity economy, despite numerous proposals, promises and plans by different administrations to achieve greater diversification. It seems that our governments were content to have sugar, rice and bauxite as its three main export products and foreign currency earners. Further, each attempt to set the diversification process in train was truncated by the lack of resources and the failure to attract foreign investors into the country. Today, the nation’s economy is limping because of lower demand and the reduction of prices for its products on the world market. This has led to a loss of revenue and the failure to improve the social services including education and health care.
The government is of the firm view that Guyana‘s future will be bright with the discovery of oil in large quantities, but even if that is the case, it must still be committed to the diversification of the economy. Or else, the nation’s products will remain vulnerable to external shocks brought about by the current downturn of commodity prices on the world market.
Considering all of the above, the need for economic diversification is becoming even more critical with each passing year. Since it is not going to happen overnight, the government must continue to aggressively pursue it, particularly as one of its stated goals outlined in its 2015 manifesto.
Many stakeholders, including the private sector commission, have stated that the government must develop an enhanced economic development strategy with diversification of the economy as the centrepiece. However, identifying, exploring and monetizing new sectors and industries take vision, innovativeness, creativity, responsiveness, transformative leadership and most of all, political will.
Those attributes and aptitudes which are sadly lacking in the country, to further unlock the potential in the people, could eventually stall the diversification process and create underdevelopment. There is a great deal more that needs to be done to achieve significant advances along the road to economic transformation and diversification.
It appears that the government’s primary focus on oil has taken precedence over everything else, but oil will not save us.

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