This year has been a chal­leng­ing one for all economies and, with the ex­cep­tion of the tech com­pa­nies, most oth­er sec­tors have strug­gled un­der the weight of the COVID-19 pan­dem­ic.

The pan­dem­ic has had a par­tic­u­lar­ly dev­as­tat­ing ef­fect on trav­el, tourism, restau­rants and ser­vices as gov­ern­ments im­posed lock­downs in an ef­fort to re­duce the rate of trans­mis­sion by lim­it­ing in­ter­ac­tion among the pop­u­lace.

The knock-on ef­fect has been a ma­jor drop in de­mand for goods and ser­vices in­clud­ing en­er­gy and en­er­gy re­lat­ed prod­ucts.

En­ter­ing in­to 2020 the glob­al en­er­gy mar­ket was al­ready soft as the risky strat­e­gy by Sau­di Ara­bia to dri­ve shale pro­duc­ers out of the mar­ket while rag­ing a price war against Rus­sia has so dam­aged glob­al mar­kets, many think it is now un­like­ly that crude oil can ever re­turn to the hay days of US $100 a bar­rel.

The way the glob­al crude mar­ket works is not sim­ply based on sup­ply and de­mand al­though that is very im­por­tant, but its al­so on sen­ti­ment and a built-in lev­el of spec­u­la­tion.

The Saud­is strat­e­gy seemed to be that their cost of pro­duc­tion is so low they could sus­tain, for some time, low crude prices with the thought that shale pro­duc­ers that have far high­er costs and that have not made a lot of mon­ey and there­fore does not have cash on hand will face bank­rupt­cy and fall-out of the mar­ket.

The Sau­di strat­e­gy in 2019 did not seem to take in­to ac­count the re­silience of Amer­i­can busi­ness­es, the fact that ef­fi­cien­cy and tech­nol­o­gy had re­duced costs, the in­crease in crude pro­duc­tion from non-OPEC mem­bers and that the sup­ply and de­mand sit­u­a­tion was not very tight, with in­ven­to­ries al­ready built up and slow­ly on their way down, be­fore the world’s largest oil pro­duc­er de­cid­ed to com­mit harakiri.

So when Covid19 hit the world econ­o­my at the end of the first quar­ter 2020, ground­ed planes, re­duced do­mes­tic trav­el and crushed glob­al de­mand; an al­ready weak oil mar­ket nat­u­ral­ly col­lapsed and we had the un­prece­dent­ed sit­u­a­tion where for the first time West Texas In­ter­me­di­ate prices fell in­to mi­nus ter­ri­to­ry.

Crude prices have re­cov­ered some­what and as of yes­ter­day Brent was trad­ing over US $50 a bar­rel and WTI just un­der US $50 a bar­rel.

Nat­ur­al gas and in par­tic­u­lar LNG prices were al­so neg­a­tive­ly im­pact­ed by the de­mand/sup­ply prices as shale gas pro­duc­tion had changed the US mar­ket and the huge new pro­duc­ers in Aus­tralia and UAE caused the Asian mar­ket to sig­nif­i­cant­ly re­duce its ar­bi­trage from the North Amer­i­can mar­ket.

Petro­chem­i­cal prices, in par­tic­u­lar methanol and am­mo­nia prices were ham­mered as de­mand re­mained weak and you see that T&T’s main for­eign ex­change earn­ers were all un­der pres­sure at the same time.

You then add to that falling crude and nat­ur­al gas pro­duc­tion and the prob­lems with the gov­ern­ment pol­i­cy, im­ple­men­ta­tion and the fis­cal regime and you see why we are in the po­si­tion we are in.

Make no bones about it T&T’s en­er­gy sec­tor is in trou­ble and what is in­creas­ing clear is that the gov­ern­ment and the Min­is­ter of En­er­gy seem in­ca­pable of find­ing so­lu­tions.

It would or­di­nar­i­ly be wrong to blame any sin­gle per­son for the state of the En­er­gy sec­tor. But we have had a min­is­ter in the per­son of Franklin Khan who has been at the helm for al­most five years and it is worth ex­am­in­ing his record to make a de­ci­sion on whether he has de­liv­ered to the coun­try.

This is not a time for par­ty sym­pa­thies nor for is­sues of con­ge­nial­i­ty. Franklin Khan is the man in charge since 2016 hav­ing tak­en over from the in­ef­fec­tive and in­con­se­quen­tial Nicole Oliv­erre.

In 2016 when Khan be­came the Min­is­ter of En­er­gy this coun­try’s crude pro­duc­tion had av­er­aged 72,000 bar­rels of oil per day (bo/d). This has now fall­en to 56,000 bo/d. That rep­re­sents a de­cline of 23 per­cent.

In 2016 the av­er­age nat­ur­al gas pro­duc­tion was 3.3 bil­lion stan­dard cu­bic feet per day (bscf/d), In 2020 the Min­istry of En­er­gy’s own fig­ures show it is down by 100 mil­lion stan­dard cu­bic feet per day, av­er­ag­ing 3.2 bscf/d. So when you hear Khan and the gov­ern­ment tak­ing cred­it for what it has done in nat­ur­al gas pro­duc­tion the ev­i­dence says oth­er­wise.

The sto­ry is the same with methanol, am­mo­nia and LNG; all down.

Khan of­ten in­sists that the coun­try is a price tak­er and there is truth in that but it can im­pact its own pro­duc­tion and the gov­ern­ment’s pol­i­cy of try­ing to take as much tax­es as it can from a small­er and small­er pie is ill ad­vised.

There are those who may ar­gue that Khan is not the one to blame, they have seen how the min­is­ter of every­thing has all but usurped the pow­er of the Min­is­ter of En­er­gy, who is of­ten forced to gen­u­flect in his pres­ence prais­ing Stu­art Young for do­ing the work that the sub­stan­tive Min­is­ter of En­er­gy should be lead­ing, but there is al­so the ques­tion of Khan’s health and whether he has the en­er­gy to run the Min­istry of En­er­gy.

It is no se­cret that Khan un­der­went ma­jor heart surgery a cou­ple years ago and we are all hap­py he was able to re­cov­er but as we looked at him shuf­fle to re­ceive his let­ter of ap­point­ment from the Pres­i­dent one could not help feel a sense of sad­ness that the Prime Min­is­ter would put such bur­den on a man who has giv­en so much and who is clear­ly in the win­ter of his years and would bet­ter spend his time with fam­i­ly and tak­ing care of his health.

It is not just the fall in pro­duc­tion that we must judge Khan’s per­for­mance by. He has over­seen a botched bid round where a year lat­er no block has been award­ed nearshore and the bids made by Roy­al Dutch Shell and BPTT were al­most not worth the pa­per they were writ­ten on as sources in the Min­istry say they were so be­low the thresh­old it ap­pears they were on­ly meant to save the gov­ern­ment’s blush­es.

Khan has been Min­is­ter of En­er­gy and, to date, there is not a sin­gle deep wa­ter bid round. To be sure we will pay the price as a coun­try down the road for his in­er­tia.

All of the drilling in­clud­ing the Touch­stone suc­cess were based on blocks giv­en out by the for­mer ad­min­is­tra­tion.

It may not be ap­par­ent but the PNM has been in pow­er for 14 of the last 19 years. In the last 11 of the PNM’s 14 years it has failed to award a sin­gle block for ex­plo­ration.

Khan has had the du­bi­ous ho­n­our of over­see­ing the clo­sure of Petrotrin, the col­lapse of the Point Lisas Es­tate and it ap­pears that he is on­ly al­lowed to be the bear­er of bad news or de­fend the in­de­fen­si­ble in Par­lia­ment. Any good news is an­nounced by the Prime Min­is­ter.

I have known Mr Khan for a long time and he is al­ways a pleas­ant man. But when it’s time to go we must ex­it the stage. We must all know when we can do no more.

Rather than be­ing pushed out, the En­er­gy Min­is­ter should do the ho­n­ourable thing and re­sign. The time has come when peo­ple need not to be wed­ded to of­fice but to prin­ci­ples and sure­ly Mr Khan must know this stint as Min­is­ter of En­er­gy has been one of fail­ure.

Over this Christ­mas sea­son and as we pre­pare to en­ter a new year one can on­ly hope Khan re­flects and does the right thing.

Mer­ry Christ­mas every­one!