Latest update November 26th, 2024 1:00 AM
Oil proceeds will cushion price increase
Dear Editor,
GHK Lall’s recent letter, “More hardship could be on the way with higher oil prices”, brings up some extremely important points about the impact of higher oil prices on Guyana.
He predicts that if oil prices rise significantly beyond US$70 per barrel, as they very well could, electricity and gasoline rates could go up. Lall worries that those rates would be harmful to all sectors of the Guyana economy, bringing even greater hardship and austerity than we are already dealing with.
Guyana has no way to prevent the price of oil from going significantly above $70 per barrel or significantly below $50 per barrel. So is there nothing we can do? Is Guyana destined to be the victim of global forces well beyond our control?
Fortunately for us, the discovery of offshore oil has given us some chips to play with.
First of all, profits from our contract with Exxon, projected to start flowing into our state in 2020, will provide a means of insulating ourselves from increases in utility rates.
Lall mentioned that the GPL introduced reduced kilowatt hour rates a few years ago to provide some relief so citizens.
Fortunately, our newfound resources provide us with options. In addition to the oil reserves that everyone is talking about, Exxon has also found new natural gas reserves offshore. That means the resources that can help drive down electricity and other utility prices for all Guyana are sitting right there, right now!
Our government and Exxon have already proposed a plan to pipe the new gas to a new state-of-the-art power plant onshore.
Such a facility would be a huge step towards not only cheaper, but cleaner and more reliable energy for Guyana. In fact, the International Monetary Fund found that switching to locally sourced gas would cut GPL’s customers’ bills by more than half!
Of course, Guyana does not have the revenue or means to create this type of infrastructure right now. That’s why our relationship with Exxon and the 2020 goal for oil production is so important.
A strong, cooperative relationship with Exxon here in Guyana gives us an opportunity to get these types of projects started immediately. Lall is right in drawing attention to the danger of rising utility prices to our struggling citizens. But Guyana is no longer relegated to the role of passive victim. Let’s use our new leverage to create solutions for everyone.
Clement Smith
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