Home' Trinidad and Tobago Guardian : March 23rd 2017 Contents MARCH 23 • 2017 guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG19
run out of oil
but, so far, that has not happened.
The world seems to be finding more
oil and gas due to new technolo-
gies that are making it easier to find
and get more oil from horizons that
were once considered out of reach.
But could this time be different?
Could there be a trend that could
dismantle the world energy busi-
ness that depends on coal, oil and
natural gas? That surely would be a
major disaster for oil and gas pro-
ducers like us.
Sometime time ago, Guyana hit a
giant field which make that coun-
try poised to produce in a few years'
time more oil than T&T.
Our country is one of the oldest
oil producers in the western world.
Alaska, which was experiencing
falling production from its Prud-
hoe Oil Field, made a giant oil field
discovery this month of 1.2 billion
Even without this, the US is now
close to oil sufficiency. The Econ-
omist magazine, in a 2014 article,
called the country Saudi America
since it can now extract significant
quantities of oil and natural gas
from shale rock. This deposit was
known for decades to sit below oil
deposits, but now there is an eco-
nomical way to mine it.
America can now produce as
much as some of the biggest oil
producers. The International Ener-
gy Agency is boldly predicting that
the US will surpass Saudi Arabia
in 2020 by producing 11.6 million
barrels per day.
The Obama administration can-
celled the Keystone pipeline project
in 2015 (a section that runs through
the US), which was supposed to
bring the oil from the oil sands of
Alberta to thirsty American refin-
The main reason being the en-
vironmental impact of mining oil
and gas stored in the sands which
require a huge amount of water and
fuel to extract the fossil fuels. Re-
cently, the Trump administration
promised to restart the project,
despite environmental concerns.
Since we derive most of our gov-
ernment revenues and the majority
of our foreign exchange from oil
and natural gas, we face a chal-
lenging future as it seems the world
market will have a larger supply of oil
and gas. Added to that, T&T's oil and
gas production is falling in the midst of
low prices. In addition, there are other
trends globally that should add more
fuel to our burning oil platform.
BP---in its Energy Outlook 2015-35---
projects some changes in the energy
During the period 2015-35, while
global GDP will double, the consump-
tion of energy will only increase 30 per
cent, indicating more efficiency. The
report continues to forecast a change
in the mix of fuels consumed.
"On the supply side, the story is one
of a continuing shift in the fuel mix to-
wards lower carbon fuels," says Spencer
Dale, group chief economist for BP.
The good news is that gas will be a
more dominant fuel (taking over from
coal and oil) and hopefully we can sell
more LNG and get more gas supplies
However, renewable fuel is expected
to grow by more than 7.0 per cent to
2035. But could the BP report be wrong
with the performance of the renewa-
bles? After all, BP is big on fossil fuels.
One of the big trends in our lifetime
is climate change.
The world is heating up due to the
amount of carbon dioxide in the at-
mosphere. Carbon dioxide is a one of
the many greenhouse gases and it traps
the sun's heat well.
The resulting effect using fossil fu-
els is 400 parts per million (ppm) of
carbon dioxide in the atmosphere at
the end of 2016, up significantly from
280 ppm in pre-industrial times. Sci-
ence has established a strong connect
between fossil fuel burning and rising
temperatures, despite this the Trump
administration saying this is not so.
Rising temperatures cause: melting
of ice at the poles, rising sea levels (both
from more melting ice and a warmer
ocean, higher rates of droughts, and a
weather that can go wild.
The impact will be huge to econo-
mies, as water becomes scarce, food
production is adversely affected, land
is lost to the ocean, etc.
Island nations, as those in the Car-
ibbean are likely to be faced with more
intense storms and damage to their
The sad news is that we are still burn-
ing fossil fuels and cutting down trees.
The UN Paris Agreement in 2016 got
most nations to agree to keep temper-
atures below 21/4C. Scientist are not
sure if this threshold is going to keep the
planet from runaway climate change
but at least it will keep many politicians
happy. Some climatologists believe that
it might be too late already. It is like we
rolled a huge boulder over a cliff and
we are trying to get it back on top of
If the world must change to lower
carbon fuels and the Paris Agreement
limits the temperature, then there are
opportunities for entrepreneurs and
policy makers to shape our economy.
Dr Terrence Farrell made the keynote
address this month at the T&T Olympic
Committee conference titled, Future of
Sport, The Next Step Entrepreneurship:
Foundation for a Sustainable Sport In-
dustry. He spoke about diversifing our
economy by making it more demand
The chair of Economic Advisory
Board says, "The ability to discern an
opportunity to meet or create a demand
is essentially an entrepreneurial act.
The entrepreneurial act involves closing
the gaps between what is required to
exploit the opportunities and the re-
sources, knowledge and capabilities
The question remains: if climate
change is going to force nations to re-
duce their fossil fuel consumption, then
if we need to stay in the energy busi-
ness, what new opportunities exists for
There is a classic marketing article
by the late Harvard Business School
professor Ted Levitt, titled Marketing
Myopia, which says businesses should
define their markets more broadly and
around customers' needs. Companies
that made buggy whips in the early 20th
century went out of business with the
coming of automobiles. When entre-
preneur Henry Ford introduced the
more affordable automobile (he used
the moving production line), cars were
more in demand than horses.
Had the makers of buggy whips
thought of being part of the transporta-
tion business and not solely the makers
of whips, they may have survived and
There may be a big lesson here. If the
world has no choice but to change to
lower carbon alternatives to prevent a
major planetary melt down, then to stay
in the traditional energy business, we
need to change with consumer demand.
Who knows, there might be entrepre-
neurs developing market shifting tech-
nologies that will generate inexpensive
energy that will make oil and gas be like
the fossilised dinosaurs.
Today, we might be in the equivalent
of the buggy whip business, tomorrow
we might be out of business.
Sajjad Hamid is an SME & family
business adviser. His contacts are:
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