Is Guyana thinking of rising oil? Are Guyanese preparing for what that means? No, I am not about to add to the volumes and libraries about Stabroek or Lisa or Corentyne. Rather, this is about oil at $80 a barrel or higher in the intermediate future.
I thought a little while back that $70 a barrel would represent an acceptable ceiling, or peak oil so to speak. I am forced to acknowledge that though that level might be a positive start, it may not be entirely satisfactory to the principal oil producing nations. In other words, $70 a barrel is representative of a tipping point in the right direction, but not enough to open the spigots and ease existing supply curbs. This is more and more corroborated by the subtle signals and not so muted language of those leading the charge for a more favourable producer price per barrel bias.
Meanwhile, as the determination of OPEC members hold, and with Russia standing firm and loud as a formidable partner, other factors are converging in a perfectly helpful storm. Demand is as fierce as ever, prior inventory cushions are disappearing, and Iran appears more and more agitated by talk of scrapping the nuclear deal. While $60 a barrel oil incentivizes shale interests to increase rig count and contribute to increased output, I am reluctant to see this as significantly challenging to the overall tight supply environment, and the related price march.
So, once again, that troubling question arises: where does that leave Guyana?
I would believe that the GPL has to be under severe stress to seek an increase in the present per kilowatt hour rate. This may not be very precise, but I seem to remember that the GPL did introduce reduced per kilowatt hour rates approximately 2 years ago when oil was in the vicinity of $40 per barrel. That was a long way back and a long time downwards (on the lower side). Even though the GPL uses some different kind of fuel, something is going to have to give and soon. While the PUC might be able to hold current rates steady, I do not envision it maintaining that same line (present price levels) should oil creep beyond $70 a barrel and continue that creeping. From all indications, the OPEC super chief, Saudi Arabia, most likely performing in the role of lead vocalist for the choir, is looking north of that $70 number, and it is not by a whisker. Now if electricity (and gasoline) rates were to go up, this would not be merely a trickledown effect, but a cascading one; one that reaches in almost every sector of the local economy, and not for the better. This means most citizens. Separately, the water people are looking for their own rate relief; relief for the GWI means pain for the people. When all of this is totted up, and with the economy already sluggish and struggling, much rougher times could be in the making. Nobody wants to hear this or would be pleased with the bringer of bad news and particularly now, given the austerities already being lived. Like it or not (and I don’t), I see more hardship on the way, and especially for those who can least manage through it.