By GHK Lall – Oil markets are fickle by nature… said Vice President Bhar-rat Jagdeo. I agree. The vision is for the long-term. I agree again. The World Bank’s output is not held highly by some CEOs. Maybe, maybe not. In short, I agree with Guyana’s oil superstar Dr. Jagdeo on almost every count. There is appreciation that that doesn’t count for much, since he does not deal with “almost.” It is all-or-none. Subtitles: there must be agreement with the PPP Government and Grandmaster Jagdeo 150% of the time, because doing so only 99% of the time converts one to a despicable citizen, traitor.
He further said that the nature of oil markets is fickle. To put simply, fickle means iffy, slippery, tricky. In raw romantic terms, hard to put one’s loving arms around for any extended interlude. I trust that no one takes offense. In more sophisticated lingo, fickle means that oil markets manifest volatility, can be choppy, turn into a monstrosity, end up a catastrophe. For oil companies, oil investors, and oil producing countries. Economist Jagdeo should know all this. Often, he pretends otherwise. For there is this contradiction based on Dr. Jagdeo’s own stated representations (facts).
Fact one: he is foregoing oil revenues today (no ring-fencing) for the maximization of revenues tomorrow. More later has its intriguing enchantments than beat less now. Fact two: he himself asserted that oil markets are fickle… something I agree with, and which is part of oil market’s sickness. Because oil is so shaky (unpredictable), then I have my own assertion to offer, respectfully naturally. Better to grasp at the present, when oil prices are up, and not roll dice, keep fingers crossed, and hope to get lucky.
In other words, ringfence now, take high oil prices now, and count Guyana’s cash now. Later may not be greater, and rather sadly turn out to be a dumbwaiter. Elaboration: a dumbwaiter is one of those old up and down contraptions moving food and other goodies. Interpretation and conclusion: the fickle nature of oil markets (prices) encourage caution and prudence. What makes more sense, all circumstances and confluences properly considered? What is based on common sense, good sense, and prudent leadership sense? In aggregate, the sense of what could benefit more, if not the most.
Fact three: the local maharajah of oil also insisted, even made a persuasive argument about the positives of the long-term over the short-term. Who would argue? Not I, master. Still, this could do with some dissection, and though I could use a delicate surgical hand from Drs. Frank Anthony and Vindya Persaud, I inhale deeply. Guyana still has huge pockets of poverty, with anywhere from a third to two fifths to close to five out of ten Guyanese forced to fight a daily war with food.
Yes, it is that kind of minefield in the richest country globally. Fact four: Jagdeo knows it, however much he refuses to admit it publicly. It is so bad that a cash lump sum of $100,000 is needed as temporary relief transfusion. There’s some egg (sunny side up) on Dr. Jagdeo’s face. If government has done so much, then why is that still needed? I proceed.
Because of poverty, Guyana and Guyanese could do with every penny they could get today. Oil prices are up there. Oil markets are fickle. That is, the bottom could fall out and high become low. But Jagdeo’s preference is for the long-term. Okay. First, hold-off on collecting today for more tomorrow. Tomorrow is promised to no one, and hungry Guyanese now, could be hungrier Guyanese then.
Second, the waiting time was moved from now to somewhere around 2027, not quite long-term, just more intermediate. Three years is a long time for many cash-strapped Guyanese. Then, throw in the fickle nature of oil markets and long term could extend into the still longer term. Guyana could be pumping more oil into an oil price trough, at least into a declining market. Where’s the beef? My apology to Mr. Jagdeo: what about the money then, more of it?
Fifth, and for the Monty Pythonesque, time for something different. Oil prices work in cycles. Even Bhar-rat Jagdeo knows that one. The world is at a price height currently, for a few years now. Dr. Jagdeo is sure to know this, too. He should know that when there is a decline in oil prices, that slump could be protracted, severely so. Conclusion: Jagdeo’s long-term vision-strategy-conspiracy (Exxon) is a long rope around the necks of Guyanese.
No ring-fencing with minimized revenue inflows now in the push for maximizing later is hanging Guyanese on a high tree, while giving them high hopes with the usual leadership hijinks. Guyanese have been waiting for four years for more since oil discovered/shipped. Three years more to 2027 was the next interval in Jagdeo’s book of promises. Now it is planning and playing for the long-term with a commodity that is as fickle as a pit bull that has eaten for a month. Lots of Guyanese could be dead, or too far gone to care by the time that Dr. Jagdeo’s long-term horizon arrives at the door.
