Oil spill fund – America has one, why not Guyana?

Apr 13, 2022 Editorial

Kaieteur News – We hope Guyanese listen up: America has a fund for oil spill protection. Following on the heels of that coverage by this paper, we presented the news that China also has its own oil spill fund. Notwithstanding its huge budget deficits and massive overall debt, the United States of America is still a very rich country, one that can still claim the mantle of global superpower. It is the one to lead the free world forward, the one that sets the stage and pace for other countries to follow.

According to the article titled, “U.S. taxes crude, money placed in oil spill trust fund -Guyana urged to follow suit” (KN April 8), this Fund has been in existence for 35 years. Monies deposited in it come from laws that empower the levying of a tax on each barrel of crude oil produced within the United States. Further, a tax is placed on petroleum products imported into the U.S. for domestic consumption. Guyanese should be quick to note that this is happening in the U.S. (it is the law), which is a rich, advanced, and sophisticated country. The U.S. is not leaving developments to chance should a major oil spill occur and those responsible for the spill are either unable or unwilling to foot the bill with cleanup costs, which could run into tens, if not hundreds, of millions, possibly billions of dollars.

This wise and sane precaution is being taken for over three decades by a country that is rich in oil smarts, and which has all kinds of skills, technology, and equipment at its disposal. The U.S. oil spill fund is an insurance policy by itself, and the premiums (tax monies collected) are paid by the oil companies themselves. This includes all U.S. domestic producers of crude ranging from Anadarko to Chevron to Hess and, of course, ExxonMobil. It is the same ExxonMobil that is present here in Guyana, and which is sword-fencing with snowflakes in its resistance to come clean and straight and give this country the type and amount of oil spill insurance that it needs.

Unlike America, Guyana has neither the muscle nor the political leadership will, to get what should be from its oil. We are speaking of sensible protections for the local environment, for our neighbours, and for the maintenance of the way of life that has been known for generations. That is, the safeguards provided by proper insurance in place that helps this poor country weather any disastrous oil spill. It is a normal practice for oil companies and other seasoned corporate players in numerous other businesses to study the threats and risks to their business prosperity and continuity, and put in place contingency measures to cushion possible worst-case scenarios, using all manner of models. This is sensible as well as represents well-thought-out strategic preparations.

It follows quite reasonably that Guyana should think along the same lines, and not be fooled into complacency by continuing billion-barrel oil discoveries offshore. Those are good, but look at the upside only; the downside, as in a massive oil spill can drain all oil wealth to nothing in a hurry. It is why we at this publication keep pushing for oil spill insurance. Already our fisherfolk are feeling the brunt of mysterious declining catch from their efforts and expenses, but of which no official source in government has anything trustworthy to offer. It could be nonoil related, but that looks a remote possibility at this point, since there seems to be a correlation to oil exploration and production activities, and what our fisherfolk are experiencing.

Like the U.S. we should have had a per barrel tax from the first day and barrel as part of our oil agreement/contract with Exxon. Though we don’t have any such provision, we must start thinking about such a tax, even though there is the bitter irony of Guyana paying the taxes of Exxon currently. The U.S. has its oil trust fund, and China has one, too. These are not poor countries, like Guyana is. Both can afford to absorb the financial blows from a big oil spill. We can’t, which is why we must have such a trust fund alongside insurance.