PM on oil drop: Even in a bad dream, we couldn't anticipate this
Prime Minister Dr Keith Rowley has expressed grave concern over the fall in US crude prices into negative territory. Oil prices plunged on Monday to below $0 due to a fall in demand amid the COVID-19 pandemic.
According to the Financial Times, West Texas Intermediate, the US benchmark, traded as low as -$40.32 a barrel in a day of chaos in oil markets. The settlement price on Monday was -$37.63, compared to $18.27 on Friday. Traders capitulated in the face of limited access to storage capacity across the US.
Speaking while chairing the first meeting of the team appointed to develop a Road Map to Recovery for Trinidad and Tobago, Dr Rowley said this was a worrying development.
“There’s been no time like this and even in a bad dream, we couldn’t anticipate this,” he said.
Turning his attention to the negative effects of the novel coronavirus, the Prime Minister lamented that the world will be forced to adopt a new normal as to how businesses and services are conducted.
Expressing the importance of a framework to guide the reopening of the economy, Dr Rowley said the Chief Medical Officer and other health experts will do a readiness assessment to advise on the restart of non-essential businesses and institutions.
“But we will try to open at the earliest opportunity, balancing and assessing the risks involved as we do so,” he said.
Meanwhile, Dr Rowley warned the public to remain vigilant once the Stay-at-Home orders are relaxed given that health and behavioural protocols will most likely be a continued requirement to prevent further transmission.
The Prime Minister also assured that during this critical time, emphasis will be placed on recovery by pursuing quick wins for jumpstarting economic activity in key sectors and stemming any further widening of income disparity through employment preservation as well as income and social support to vulnerable groups.
Noting that the Government must continue to fund social programmes, Dr Rowley further explained that Trinidad and Tobago cannot be turned into a welfare state. He said this will lead to bankruptcy and poverty.
“Throwing borrowed billions of dollars into unproductive subsidies, increased social welfare increased pensions and massive grants is an unsustainable approach which will further wreck the economy and damage any chance we have of balancing the national budget in the foreseeable future. This will destroy the progress we have made in expenditure restraint, domestic production and income generation over the last four years. In particular, any suggestions that we should increase existing welfare which already cost us almost $4 billion a year, and that we increase contributory pensions, when the NIS is already in deficit and heading for insolvency seriously limit the use of these options if the goal is not only survival but sustainability as well.”
He also spoke on the need for the economy to be diversified and for the COVID-19 recovery team to assist in offering solutions rather than solely identifying problems.