I note that there is some local optimism on our economic recovery based on increasing price of oil (now in the (US)$90/bbl) and other energy products, though the price of our major but depleting energy export--natural gas--is still in the doldrums (US)$4/mmbtu). It is also noteworthy that the world prices of other commodities, metals, in particular, are also rapidly increasing in price.
For example, copper is now at (US)$9.6 thousand, an increase of 30 per cent for the year 2010, and, both nickel and tin are up by 55 per cent. All of this is being taken to mean that the world is recovering from the recent recession and things will soon be back to normal, even in our neck of the woods. However, the demand that is driving these increases in price is coming from the emerging BRICs economies. The developed world economies, the United States, United Kingdom, Germany, Japan, France, etc, are all still flat and others, Ireland, Greece, Spain, are in a state of collapse.
When these begin to grow the demand for these commodities, especially oil (since renewables still cannot replace oil), will result in higher prices--we will see the oil price again racing to (US)$150/bbl. Also, we need to recognise that peak oil is upon us, in which there are still resources to exploit, but the price to make them available is uneconomic. Also, oil at this price is what triggered the last recession, though the excesses and greed of the global financial system hastened the economic collapse. Some see shale gas as providing an energy bridge, but moreso for coal in electricity generation, given its availability.
T&T is not an economic island unto itself. Hence, the recovery of our export dependent system in the short-term is closely linked to what happens globally. Further, the local economic stimulation is peripheral to our recovery, since it will be based on accruing debt. The People's Partnership Government, as Lloyd Best would say, has a hard row to hoe.
Stuart Bell
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