The lateral thinker

Feb 18, 2024 Peeping Tom

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Peeping tom…

Kaieteur News – Jagdeo turned up at his last Press Conference with a spreadsheet which shows projected production that would continue until 2047. This was his defence in relation to the argument that at production of 645,000 barrels per day, the Liza , Liza 2 and Payara projects would exhaust the oil reserves in those projects in five years based on the numbers provided by Exxon on its website.

Jagdeo’s arguments are to the effect that, first, future oil projects will sustain production and, second, that oil production is expected to peak and then decline. Interestingly, he is using the need for sustainability of oil production to buttress his argument against ring-fencing at present, saying that Guyana is foregoing present benefits for future gain.

So desperate he is to defend his position that he claims that Glenn Lall, the most strident advocate for ring fencing, engages in linear thinking on the issue. Presumably, Jagdeo is not a linear thinker and it is this which gives him the foresight to know that it is better for Guyana to forego present benefits for future gain.

The text books will explain that linear thinking is a structured approach to problem-solving or decision-making where one moves logically from one step to the next in a straight line. It involves a systematic and sequential progression of thoughts or actions, typically following a predetermined or conventional path.

Linear thinking can be contrasted with ‘lateral thinking’ which is more creative and unconventional approach to problem-solving that involves exploring multiple perspectives and considering ideas that may not seem immediately relevant. Lateral thinking encourages thinking “outside the box” and often involves making unexpected connections between seemingly unrelated concepts.

It is probably the employment of lateral thinking which allows Jagdeo make the illogical conclusion that it is in Guyana’s interest to forego present revenues in favour of future benefits. Despite refusing to ring fence existing projects, Jagdeo still does not accept that Guyana is a co-investor in oil exploration and development. If my money is being used for future oil development, then if that does not make me a co-investor, then lateral thinking is not for me.

He also will not concede that by allowing the oil companies to extract monies for future development that Guyana is effectively subsidizing the operations of the oil companies. But that too may be because of thinking  ‘outside of the box’.

But by not ring-fencing the projects, Jagdeo is contradicting his own logic. He was the one who in defending his unpublished depletion policy claimed that the policy is to extract as much oil as fast as possible. His justification for this is that fossil fuel production is on its way out due to the emphasis on renewables.

Well, if fossil fuels have a limited shelf-life it means that in the future we are likely to see lower production and lower costs. Oil prices may well decline to around $10 per barrel when that time comes. And this is when Jagdeo wants us to collect the benefits that are being foregone now, when prices and production are low. But perhaps lateral thinking offers him a foresight which cannot be contemplated by mere ordinary mortals.

On the issue of the amendment to the formula for withdrawals from the Natural Resource Fund, Jagdeo points to the example of Norway. That country, as is known, began oil production in 1971 but did not establish a Sovereign Wealth Fund until 1990.

Jagdeo uses this to justify his government using more of its oil revenues now, pointing out that in 1990 when Norway established its Fund it had a higher level of development than Guyana. He therefore implies that Guyana should use a greater share of its oil revenues now to rapidly catapult development and save more later on when the country would have reached a higher level of development. So he wants to front-end development using oil revenues.

But this is the same Jagdeo that wants to bank-end ring-fencing. If he had ring-fenced the oil projects, he would have not had to borrow money for the rapid development he wants to see in the early years. He would not have had to worry about borrowing from Exxim Bank of the United States for the gas-to-energy plant and the other infrastructural works in the social services sector. He would have had his money for the rapid development and this would have allowed him, in later years, to do what Norway did after it has attained a high level of industrialization: invest in societal welfare.

But don’t tell that to Jagdeo. He is thinking ‘outside of the box’ so much so that he seems to have forgotten about the ‘box’.

 

 

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• First, foregoing, future oil projects, Guyana, ring-fencing the projects

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