Tag Archives: caribbean countries

Cheaper oil- Many winners, a few bad losers

Cheaper oil- Many winners, a few bad losers

A lower price will boost the world economy and harm some unpleasant regimes—but there are risks

Crude oil prices -2014

Crude oil prices -2014

Oct 25th 2014 | The Economist magazine

THE collapse of the Soviet Union in 1991 had many causes. None was as basic as the fall in the price of oil, its main export, by two-thirds in real terms between 1980 and 1986. By the same token, the 14-year rule of Vladimir Putin, heir to what remained, has been bolstered by a threefold rise in the oil price.

Now the oil price is falling again. Since June, it has dropped from about $115 for a barrel of Brent crude to $85 or so—a reduction of roughly a quarter. If prices settle at today’s level, the bill for oil consumers will be about $1 trillion a year lower. That would be a shot in the arm for a stagnating world economy. It would also have big political consequences. For some governments it would be a rare opportunity; for others, a threat.

The scale of shale

Predicting oil prices is a mug’s game (we speak from experience). The fall of the past three months is partly the result of unexpected—and maybe short-lived—developments. Who would have guessed that chaotic, war-torn Libya would somehow be pumping 40% more oil at the end of September than it had just a month earlier? Saudi Arabia’s decision to boost output to protect its market share and hurt American shale producers and see off new developments in the Arctic was also a surprise. Perhaps the fall was exaggerated by hedge-fund investors dumping oil they had been holding in the false expectation of rising prices.

Geopolitical shocks can surprise on the upside as well as the down. Saudi Arabia may well decide to resume its self-appointed post as swing producer and cut output to push prices up once more. With war stalking Iraq, Libya still fragile and Nigeria prey to insurgency (see article), supply is vulnerable to chaotic forces.

But many of the causes of lower prices have staying power. The economic malaise weighing down on demand is not about to lift, despite the tonic of cheaper oil (see article). Conservation, spurred by high prices and green regulation, is more like a ratchet than a piece of elastic. The average new car consumes 25% less petrol per mile than ten years ago. Some observers think the rich world has reached “peak car”, and that motoring is in long-term decline. Even if they are wrong, and lower prices encourage people to drive more, energy-saving ideas will not suddenly be uninvented.

Much of the extra supply is baked in, too. Most oil investment takes years of planning and, after a certain point, cannot easily be turned off. The fracking revolution is also likely to rage on. Since the start of 2010 the United States, the main winner, has increased its output by more than 3m barrels per day to 8.5m b/d. Shale oil is relatively expensive, because it comes from many small, short-lived wells. Analysts claim that a third of wells lose money below $80 a barrel, so shale-oil production will adjust, helping put a floor under the price. But the floor will sag. Break-even points are falling. In past price squeezes, oilmen confounded the experts by finding unimagined savings. This time will be no different.

For governments in consuming countries the price fall offers some budgetary breathing-room. Fuel subsidies hog scandalous amounts of money in many developing countries—20% of public spending in Indonesia and 14% in India (including fertiliser and food). Lower prices give governments the opportunity to spend the money more productively or return it to the taxpayers. This week India led the way by announcing an end to diesel subsidies. Others should follow Narendra Modi’s lead.

The axis of diesel

For those governments that have used the windfall revenues from higher prices to run aggressive foreign policies, by contrast, things could get uncomfortable. The most vulnerable are Venezuela, Iran and Russia.

The first to crack could be Venezuela, home to the anti-American “Bolivarian revolution”, which the late Hugo Chávez tried to export around his region. Venezuela’s budget is based on oil at $120 a barrel. Even before the price fall it was struggling to pay its debts. Foreign-exchange reserves are dwindling, inflation is rampant and Venezuelans are enduring shortages of everyday goods such as flour and toilet paper.

Iran is also in a tricky position. It needs oil at about $140 a barrel to balance a profligate budget padded with the extravagant spending schemes of its former president, Mahmoud Ahmedinejad. Sanctions designed to curb its nuclear programme make it especially vulnerable. Some claim that Sunni Saudi Arabia is conspiring with America to use the oil price to put pressure on its Shia rival. Whatever the motivation, the falling price is certainly having that effect.

Compared with these two, Russia can bide its time. A falling currency means that the rouble value of oil sales has dropped less than its dollar value, cushioning tax revenues and limiting the budget deficit. The Kremlin can draw on money it has saved in reserve funds, though these are smaller than they were a few years ago and it had already budgeted to run them down. Russia can probably cope with today’s prices for 18 months to two years, but the money will eventually run out. Mr Putin’s military modernisation, which has absorbed 20% of public spending, looks like an extravagance. Sanctions are stifling the economy and making it hard to borrow. Poorer Russians will be less able to afford imported food and consumer goods. If the oil price stays where it is, it will foster discontent.

Democrats and liberals should welcome the curb the oil price imposes on countries like Iran, Venezuela and Russia. But there is also an increased risk of instability. Iran’s relatively outward-looking president, Hassan Rouhani, was elected to improve living standards. If the economy sinks, it could strengthen the hand of his hardline opponents. Similarly, a default in Venezuela could have dire consequences not just for Venezuelans but also for the Caribbean countries that have come to depend on Bolivarian aid. And Mr Putin, deprived of economic legitimacy, could well plunge deeper into the xenophobic nationalism that has fuelled his campaign in Ukraine. Cheaper oil is welcome, but it is not trouble-free.

Six Caribbean countries eligible for US visa programme

caribbean map

 Petitions for nationals of unlisted countries may be approved if it is determined to be in the interest of the United States.

WASHINGTON D.C., United States, Tuesday January 28, 2014, CMC – The United States Citizenship and Immigration Services (USCIS) says six Caribbean countries are among 63 countries worldwide that are eligible to participate in two visa programmes this year.

The H-2A and H-2A and H-2B petition H-2B Visa programmes allow US employers to bring foreign nationals to the United States to fill temporary agricultural and non-agricultural jobs, respectively.   Continue reading

Leaders in self-denial as Caribbean economic crisis worsens

Leaders in self-denial as Caribbean economic crisis worsens

by Sir Ronald Sanders –   published Caribbean360.com

imageSt Lucia’s Prime Minister Dr Kenny Anthony charged that governments are “engaged in one form or another of self-denial” while the Caribbean is “in the throes of a major crisis like it has never ever experienced before”.

Thursday November 7, 2013 – St Lucia’s Prime Minister Dr Kenny Anthony says that there is a grave economic crisis gnawing away at Caribbean countries and “governments are busy looking inward – each busy with their own agenda rather than pursuing a Caribbean solution to the economic crisis”. Not for the first time Dr Anthony has dared to tred where many other Caribbean leaders have shied away.    Continue reading

Bad news chasing good money away from the Caribbean

Bad news chasing good money away from the Caribbean

caribbean mapInternational expert says profit-seekers do not lend to governments “that cannot return their money with agreed interest payments”.

Lloyd Nicholas

NEW YORK, United States, Monday July 1, 2013 – Some relationships just don’t last too long; some don’t even get started if the other is broke.

This is exactly what happened some 10 weeks ago when investment suitors came rushing to the emerging markets with bags of money to mop up US$20 trillion of cheap government securities going below a one per cent return and now the tide of lenders is ebbing.    Continue reading

Caribbean accounts for 27 percent of world’s homicides – UNDP report

Caribbean accounts for 27 percent of world’s homicides

MARCH 3, 2012 | BY  | FILED UNDER NEWS

 -UN report shows violent crime rising in region

A rising crime rate is threatening economies and livelihoods in , states a new United Nations report that calls for the right mix of policies and programmes to tackle the problem.

The Caribbean Human Development Report 2012, prepared by the UN Development Programme (UNDP), says that with the exception of Barbados and Suriname, homicide rates – including gang-related killings – have increased substantially in the last 12 years across the Caribbean, while they have been falling or stabilizing in other parts of the world.

Latin America and the Caribbean are home to 8.5 per cent of the world population, yet the region accounts for some 27 per cent of the world’s homicides, according to the report, which was launched today in Port of Spain, Trinidad and Tobago.

The report – the first UN Human Development Report focusing on the Caribbean – is the result of extensive consultations with 450 experts, practitioners and leaders and reflect a large-scale survey with 11,555 citizens in the seven assessed countries in region: Antigua and Barbuda, Barbados, Guyana, Jamaica, Saint Lucia, Suriname, and Trinidad and Tobago. Continue reading

The Caribbean Human Development Report (HDR) 2012:

The Caribbean Human Development Report (HDR) 2012:

Human Development and the Shift to Better Citizen Security, commissioned by the United Nations Development Programme (UNDP) as the first HDR on the Caribbean analyses the impact of insecurity and violence on human development, within the development context of Caribbean Small Island Developing States (SIDS). Most importantly, the Caribbean HDR provides evidence based recommendations on how to better address insecurity and violence in the English- and Dutch-speaking Caribbean countries.

Read More

Human Development and the Shift to Better Citizen Security

— Post #1095

%d bloggers like this: