Finance Minister Colm Imbert will today address members of the media to provide an update on T&T's current financial situation.
The update is timely, coming as it does on the heels of the largest plunge in crude oil prices since the 1991 Gulf War.
Yesterday, Energy Minister Franklin Khan confirmed that a high-powered ministerial team, including himself, Imbert and National Security Minister Stuart Young were monitoring the situation and were keeping Prime Minister Dr Keith Rowley in the loop on what was happening. He cautioned that T&T could be “hurt severely.” Dr Rowley is due to return home this evening following talks in London with BP and a visit to Ghana.
Former Energy Minister Kevin Ramnarine has opined that with the price of oil in the low US$30s, there is no subsidy on gasoline or diesel. According to Ramnarine, the Government would be collecting a surplus at the pump, akin to a tax. Ramnarine suggested that “Government must therefore immediately review the prices of fuel at the pump, especially super gasoline.”
That is hardly likely to happen at this time. But we leave that for the experts in the Energy Ministry and Ministry of Finance to decide.
The fact is that the plunge in oil prices comes at a critical moment when the COVID-19 outbreak is, according to AP, “squeezing economies around the globe to the point where world oil demand is forecast to shrink in 2020 for the first time since 2009.”
The current plunge in oil prices is the result of a spat between Saudi Arabia and Russia, two major oil producers. Oil prices yesterday experienced the biggest drop in one day since the 1991 Gulf War, plummeting as much as 34% to $27.34 a barrel. It made a slight recovery in late evening trading.
The decline followed Russia’s refusal last week to join OPEC in proposed production cuts aimed at supporting prices. Saudi Arabia, the leading OPEC member, sharply changed course over the weekend, cutting prices and signalling it will ramp up production.
Imbert had budgeted the price of oil at US$60 a barrel. In its January 2020 economic bulletin, the Central Bank’s outlook projected global growth to remain relatively subdued in 2020, weighed down by heightened geopolitical tensions and the impact of the COVID-19 virus on trade and finance.
The report noted that the epidemic had already had a wide range of impacts on global commodity prices and had already begun to undermine forecasts for global economic growth.
No one had even envisaged what is happening with Russia and Saudi Arabia, far less the impact it can have on oil-producing economies like T&T.
Economist Roger Hosein has warned the spat could result in a further plunge of oil prices and this country’s energy revenues.
The country waits to see whether Minister Imbert will present a message of hope or have to caution citizens that they should expect more tough economic and belt-tightening measures in this election year?