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I LO Tripartite Caribbean Conference Promoting Human Prosperity beyond the Global Financial Crisis Kingston Jamaica 1-2 April 2009 Impact of the Global Economic Impact of the Global Economic Crisis on the Energy Industries Crisis on the

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SLIDE 1

Impact of the Global Economic Impact of the Global Economic Crisis on the Energy Industries Crisis on the Energy Industries and Economy and Economy

Gregory McGuire Gregory McGuire Lecturer Lecturer Energy Economics and Strategy Energy Economics and Strategy UWI St. Augustine UWI St. Augustine

I LO Tripartite Caribbean Conference “Promoting Human Prosperity beyond the Global Financial Crisis Kingston Jamaica 1-2 April 2009

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Presentation Outline Presentation Outline

  • Global Overview

Global Overview

  • Energy and the Economy

Energy and the Economy

  • Commodity Markets : Status and

Commodity Markets : Status and Outlook Outlook

  • Economic Impact ;Exporters

Economic Impact ;Exporters

  • Economic Impact : Importers

Economic Impact : Importers

  • Conclusions

Conclusions

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SLIDE 3

The Context The Context

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

MYOB Ltd Stakeholders

  • Financial Crisis
  • Economic meltdown
  • Shrinking Demand
  • Crash in Commodity Markets

and tourism

  • State Intervention/ Stimulation
  • Trade implications/

Protectionism

  • Best bet : recovery in 24 m.
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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

WEO Real GDP Growth Projections WEO Real GDP Growth Projections

( (In percent change from a year earlier) In percent change from a year earlier)

U.S. U.S. Euro Japan China India World Euro Japan China India World 200 2009 (Jan.09) 9 (Jan.09) -

  • 1.6

1.6 -

  • 2.0

2.0 -

  • 2.6 6.7 5.1 0.5

2.6 6.7 5.1 0.5 200 2009 (Nov.08) 9 (Nov.08) -

  • 0.7

0.7 -

  • 0.5

0.5 -

  • 0.2 8.5 6.3 2.2

0.2 8.5 6.3 2.2 Change Change -

  • 0.9

0.9 -

  • 1.5

1.5 -

  • 2.4

2.4 -

  • 1.8

1.8 -

  • 1.2

1.2 -

  • 1.7

1.7 20 2010 (Jan.09) 1.6 0.2 0.6 8.0 10 (Jan.09) 1.6 0.2 0.6 8.0

6.5 3.0 6.5 3.0

20 2010 (Nov.08) 10 (Nov.08)

1.5 0.9 1.1 9.5 6.8 3.8 1.5 0.9 1.1 9.5 6.8 3.8 Change 0.1 Change 0.1 -

  • 0.7

0.7 -

  • 0.5

0.5 -

  • 1.5

1.5 -

  • 0.3

0.3 -

  • 0.8

0.8 Source: IMF, World Economic Outlook. Source: IMF, World Economic Outlook.

I MF: The Outlook is Bleak I MF: The Outlook is Bleak

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

World Bank confirms(31 World Bank confirms(31 st

st/ 3/ 09)

/ 3/ 09)

THE OUTLOOK I S BLEAK THE OUTLOOK I S BLEAK

  • Global economy to shrink by

Global economy to shrink by -

  • 1.7%

1.7%

– – Largest contraction in 80 yrs Largest contraction in 80 yrs

  • High Income countries =

High Income countries = -

  • 2.9%

2.9%

  • Developing countries inc. China and

Developing countries inc. China and India= 2.1% India= 2.1%

– – Without China and India Without China and India -

  • 1.7%

1.7%

  • Latin America Caribbean

Latin America Caribbean -

  • 0.6%

0.6%

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Trinidad and Tobago Trinidad and Tobago Energy Dependence Energy Dependence

Notes: p Notes: p-

  • provisional , r

provisional , r – – revised revised Source Source: Annual Economic Survey, 2007: : Annual Economic Survey, 2007: www.central www.central-

  • bank.org.tt

bank.org.tt

3.3 3.3

3.3 3.3 3.4 3.4 3.6 3.6 3.2 3.2 3.4 3.4 Employment Employment

86.7 86.7

91.0 91.0 85.9 85.9 85.8 85.8 83.3 83.3 75.9 75.9 M M’ ’dise Exports dise Exports

56.5 56.5

61.9 61.9 53.6 53.6r

r

42.4 42.4r

r

42.8 42.8r

r

27.8 27.8r

r

Gov Gov’ ’t Revenues t Revenues

43.0 43.0

46.8 46.8 42.9 42.9 37.1 37.1 33.9 33.9 26.2 26.2 GDP GDP 2007 2007p

p

2006 2006r

r

2005 2005 2004 2004 2003 2003 2002 2002 ITEM ITEM

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Key Energy Based Commodity Exports Key Energy Based Commodity Exports

  • Petroleum

Petroleum

  • Natural Gas

Natural Gas

  • Methanol

Methanol

  • Ammonia

Ammonia

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Crude Oil Prices History Crude Oil Prices History 1982 1982-

  • 2007

2007

20 40 60 80 100 120 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 Nominal Dollars per Barrel Refiner Acquisition Cost of Imported Crude Oil (IRAC)

Source: EIA

Iraq Invades Kuwait Saudi Arabia Abandons Swing 9/11 Attacks Asian Economic PdVSA Worker's Strike in Venezuela and Iraq War W i OPEC Cuts Quotas; Rising Demand Hurricane Ivan in Gulf of Hurricanes Dennis, Katrina Nigerian Cut-Offs Rising Demand; Low Spare Capacity ; Weak Dollear; Inventor y

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Major Events and Real World Oil Prices, 1970-2008Q1

(Prices adjusted by CPI for all Urban Consumers, 2008)

$- $10 $20 $30 $40 $50 $60 $70 $80 $90 $100 1 9 7 1 9 7 2 1 9 7 4 1 9 7 6 1 9 7 8 1 9 8 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2 2 4 2 6 2 8 Constant $2008 per barrel 1973 Arab Oil Embargo Iranian Revolution; Shah Deposed Iran-Iraq War Begins; oil prices peak Saudis abandon "swing producer" role; oil prices collapse Iraq Invades Kuwait Gulf War Ends Asian economic crisis; oil

  • versupply; prices fall sharply

Prices rise on OPEC cutbacks, increased demand Prices fall sharply on 9/11 attacks; economic weakness Prices spike on supply disruptions, rapid demand increases, constrained OPEC capacity, low inventories

Saudi Light Imported Refiner Acquisition Cost

Source: EIA PdVSA workers strike in Venezuela

Real Oil Prices 1976 Real Oil Prices 1976-

  • 2008

2008

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Oil Prices and World Economic Growth Oil Prices and World Economic Growth (1998 (1998-

  • 2008)

2008)

2 4 6 8 10 12 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 years M

  • n

th s 20 40 60 80 100 120 US EU China India Oil Prices

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Crude Oil Prices (WTI ) Crude Oil Prices (WTI ) (1998 (1998-

  • Mar’09)

Mar’09)

20 40 60 80 100 120 140 160 J a n

  • 9

8 J a n

  • 9

9 J a n

  • J

a n

  • 1

J a n

  • 2

J a n

  • 3

J a n

  • 4

J a n

  • 5

J a n

  • 6

J a n

  • 7

J a n

  • 8

J a n

  • 9

Months U S $ / b b l .

Source: US EIA

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Natural Gas Prices 2003 Natural Gas Prices 2003-

  • ’08

’08

( Henry Hub) ( Henry Hub)

2 4 6 8 10 12 14 J a n

  • 3

A p r

  • 3

J u l

  • 3

O c t

  • 3

J a n

  • 4

A p r

  • 4

J u l

  • 4

O c t

  • 4

J a n

  • 5

A p r

  • 5

J u l

  • 5

O c t

  • 5

J a n

  • 6

A p r

  • 6

J u l

  • 6

O c t

  • 6

J a n

  • 7

A p r

  • 7

J u l

  • 7

O c t

  • 7

J a n

  • 8

A p r

  • 8

J u l

  • 8

O c t

  • 8

US $/mmbtu

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Market I nsights Market I nsights

  • Prices have remained depressed in

Prices have remained depressed in spite of: spite of:

– – Extreme cold weather in Europe and Extreme cold weather in Europe and North America. North America. – – OPEC Production cuts amounting to 3.5 OPEC Production cuts amounting to 3.5 million bbls/d million bbls/d – – 2 week cut off in Russian gas supplies to 2 week cut off in Russian gas supplies to Europe. Europe. – – Heightened tensions in the Middle East. Heightened tensions in the Middle East.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

  • Prices for natural gas have trended

Prices for natural gas have trended downward over last eight months. downward over last eight months.

  • In 2008 prices averaged $9.13 per Mcf .

In 2008 prices averaged $9.13 per Mcf .

  • For fiscal yr. to date natural gas spot

For fiscal yr. to date natural gas spot prices have averaged US 5.70/per prices have averaged US 5.70/per mmbtu. mmbtu.

Market Insights Market Insights

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Today’s Prices Today’s Prices

3.59 3.59 Natural Gas Natural Gas Henry Hub Spot Henry Hub Spot 49.66 49.66 WTI Cushing WTI Cushing Spot Spot 48.58 48.58 Nymex Nymex Crude Crude Future Future

PRICE* PRICE*($/ bbl) ($/ bbl)

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Outlook Outlook

  • Oil prices are likely to weaken in the

Oil prices are likely to weaken in the summer months. summer months.

  • Gas prices will also weaken in most

Gas prices will also weaken in most markets markets

  • Recovery now hinges mainly on

Recovery now hinges mainly on resumption of economic growth in resumption of economic growth in major economies. major economies.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Ammonia and Methanol Ammonia and Methanol Prices Prices

Petrochemical prices 2006-2008 100 200 300 400 500 600 700 800 900 1000

Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07 Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08 Feb-08 Mar-08 Apr-08 May-08 Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08

Us$/MT Ammonia (fob Caribbean, US $/MT) Methanol (US $/MT)

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Ammonia as of March 2009 Ammonia as of March 2009

  • The average ammonia price

The average ammonia price for January 2009 (fob for January 2009 (fob Caribbean) averaged Caribbean) averaged $102/ tonne. Prices have $102/ tonne. Prices have recovered to US$185/ Tonne recovered to US$185/ Tonne in March in March

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

  • Supply continues to appear

Supply continues to appear sufficient sufficient

  • higher

higher-

  • cost players choosing to

cost players choosing to curtail production curtail production

  • Market continues to be depressed

Market continues to be depressed

  • Prices lingering around US$140

Prices lingering around US$140-

  • 150/tonne

150/tonne

Methanol as of March 2009 Methanol as of March 2009

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Outlook for 2009 Outlook for 2009

The storyline from the past few months will continue

High stocks for commodities Lower demand. Impact of global recession.

Markets likely to remain weak over the next 12 -18months.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Trinidad and Tobago Trinidad and Tobago Energy Dependence Energy Dependence

Notes: p Notes: p-

  • provisional , r

provisional , r – – revised revised Source Source: Annual Economic Survey, 2007: : Annual Economic Survey, 2007: www.central www.central-

  • bank.org.tt

bank.org.tt

3.3 3.3

3.3 3.3 3.4 3.4 3.6 3.6 3.2 3.2 3.4 3.4 Employment Employment

86.7 86.7

91.0 91.0 85.9 85.9 85.8 85.8 83.3 83.3 75.9 75.9 M M’ ’dise Exports dise Exports

56.5 56.5

61.9 61.9 53.6 53.6r

r

42.4 42.4r

r

42.8 42.8r

r

27.8 27.8r

r

Gov Gov’ ’t Revenues t Revenues

43.0 43.0

46.8 46.8 42.9 42.9 37.1 37.1 33.9 33.9 26.2 26.2 GDP GDP 2007 2007p

p

2006 2006r

r

2005 2005 2004 2004 2003 2003 2002 2002 ITEM ITEM

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Measuring Economic Measuring Economic I mpact I mpact

  • Government Revenue and

Government Revenue and Expenditure Expenditure

  • GDP

GDP

  • Balance of Payments and

Balance of Payments and Exchange Rate Exchange Rate

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Gov’t Rev. and Expenditure Gov’t Rev. and Expenditure

Government Revenue vs. Government Expenditure

0.0 10.0 20.0 30.0 40.0 50.0 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 TT$Bn Total Gov't Revenue Total Gov't Expenditure

2004-08 :

Revenue increase 126%; Expenditure increase+ 134%

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Recent Production Trends Recent Production Trends

Natural Gas Utilization 2000-08 0.0 500.0 1000.0 1500.0 2000.0 2500.0 3000.0 3500.0 4000.0 4500.0 2 2 1 2 2 2 3 2 4 2 5 2 6 2 7 2 8 Years MMCFD 50 100 150 200 250 1 9 7 6 1 9 7 8 1 9 8 0 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 0 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 0 0 0 2 0 0 2 2 0 0 4 2 0 0 6 Years " 0 0 0 b b ls /d a y

Source Table A8

Gas Growth Rate has Plateau: Oil is in long Term Decline

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Petrochemical Output Petrochemical Output

  • Will remain flat in 2008

Will remain flat in 2008-

  • 9

9

  • No new plants coming on

No new plants coming on-

  • stream.

stream.

  • Planned plants delayed.

Planned plants delayed.

  • Gas supply overhang will impact NGC

Gas supply overhang will impact NGC cash flow and revenue base. cash flow and revenue base. -

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

I mplications I mplications

  • Government estimates an oil

Government estimates an oil revenue shortfall relative to revenue shortfall relative to Budget of $ 8 billion dollars , Budget of $ 8 billion dollars ,

  • Non

Non – –energy revenue is energy revenue is estimated to fall by another 8 estimated to fall by another 8-

  • 9 billion

9 billion

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

I mplications I mplications

  • Total Revenue Loss (

Total Revenue Loss (

Energy and Non Energy ) Energy and Non Energy )

estimated at $15 to estimated at $15 to $18 billion $18 billion , about1/3 of

, about1/3 of national Budget . national Budget .

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Real GDP Growth 2002 Real GDP Growth 2002-

  • 08

08

5 10 15 20 25 30 35 2002 2003 2004 2005 2006 2007 2008 Petroleum Sector

  • Total

LNG 4 LNG3 LNG2

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Downstream Expansion Downstream Expansion 2009 2009-

  • 11

11

  • Three gas based projects currently

Three gas based projects currently under construction. under construction.

  • Six planned projects have been either

Six planned projects have been either postponed or delayed as a result of postponed or delayed as a result of financing difficulties or reduced risks financing difficulties or reduced risks appetite. appetite.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

I mplications I mplications

  • Energy Sector which accounts for 45%

Energy Sector which accounts for 45%

  • f GDP will remain flat or decline in
  • f GDP will remain flat or decline in

2009. 2009.

– – Oil decline. Oil decline. – – Petrochemicals output reduction Petrochemicals output reduction – – Steel closure Steel closure

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

I mplications I mplications

  • Non energy sector which depends on

Non energy sector which depends on energy will also decline sharply. energy will also decline sharply.

– – Service companies Service companies – – Hotels and Guesthouses Hotels and Guesthouses

  • Rest of economy will also decline sharply.

Rest of economy will also decline sharply.

– – Financial services Financial services-

  • Clico

Clico – – Government expenditure cuts Government expenditure cuts

  • Economy likely to experience first

Economy likely to experience first contraction in 20 years. contraction in 20 years.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Summary Balance of Summary Balance of Payments Payments

(US$ million) (US$ million)

9.9 9.9

6530.8 6530.8 1118.8 1118.8

(6843) (6843)

1085 1085

12100 12100

4808 4808

2006 2006 9.4 9.4 8.9 8.9 6.9 6.9 5.4 5.4 Import Cover ( Import Cover ( months) months)

6673.5 6673.5 4885.7 4885.7 2993.0 2993.0 2257.8 2257.8 Gross Official Gross Official Reserves Reserves 1541.1 1541.1 1475.9 1475.9 531 531 334.2 334.2 Overall Surplus Overall Surplus

(7670) (7670) (5725) (5725) (4,894) (4,894) (3912) (3912) Imports Imports

1009 1009 1076.0 1076.0 1260 1260 827.8 827.8

  • f which: Non
  • f which: Non

Energy Exports Energy Exports 131391 131391 9672 9672 6,363.20 6,363.20 5,958.00 5,958.00 Exports Exports

5380.9 5380.9 3594 3594 1,6470 1,6470 1,081.60 1,081.60 Current Account Current Account

2007 2007 2005 2005

2004 2004 2003 2003

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Foreign Exchange Foreign Exchange

Net Official Foreign Reserves

‐2.0 0.0 2.0 4.0 6.0 8.0 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 US$Bn Net Official Foreign Reserves

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

I mplications I mplications

  • Imports growth likely to continue for a

Imports growth likely to continue for a while although foreign exchange while although foreign exchange earnings have fallen sharply earnings have fallen sharply

– – Hedging by importers Hedging by importers – – Speculation and Asset switching Speculation and Asset switching

  • Pressure on exchange rate as supply

Pressure on exchange rate as supply

  • f FX dwindles.
  • f FX dwindles.
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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Short Short-

  • Medium Term

Medium Term Outlook Outlook

  • The global recession is having a pervasive

The global recession is having a pervasive impact on the international economy. impact on the international economy.

  • Oil gas and commodity prices have all

Oil gas and commodity prices have all fallen sharply and likely to remain at lower fallen sharply and likely to remain at lower levels levels

  • T&T Gov’t IS likely to be in fiscal deficit

T&T Gov’t IS likely to be in fiscal deficit for 2008 for 2008-

  • 9 and beyond .

9 and beyond .

  • Global slowdown may have a mitigating

Global slowdown may have a mitigating impact on domestic inflation impact on domestic inflation

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Medium Term Outlook Medium Term Outlook

  • At best energy sector growth will be flat

At best energy sector growth will be flat less than 1% . less than 1% .

  • Non energy sector growth will wind down

Non energy sector growth will wind down because of reduction in Gov’t injections and because of reduction in Gov’t injections and

  • Significant fall in private sector investment

Significant fall in private sector investment as confidence wanes as confidence wanes

  • Foreign exchange availability will tighten

Foreign exchange availability will tighten with possible depreciation of Exchange with possible depreciation of Exchange rate. rate.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Medium Term Outlook Medium Term Outlook

  • Economy likely to experience

Economy likely to experience its first contraction in GDP in its first contraction in GDP in 20 years. 20 years.

  • Unemployment likely to

Unemployment likely to increase 8 increase 8-

  • 10%

10%

  • Rise in Industrial tensions

Rise in Industrial tensions

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Policy I mperatives. Policy I mperatives.

  • Align expenditure with revenue

Align expenditure with revenue based on long term prices. based on long term prices.

  • Develop a people based vision.

Develop a people based vision.

  • Give priority to basic needs

Give priority to basic needs before grand projects. before grand projects.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Policy I mperatives Policy I mperatives

  • Economic Transformation

Economic Transformation

  • Build the onshore economy, with

Build the onshore economy, with emphasis on cultural industries. emphasis on cultural industries.

  • Maximize value added from

Maximize value added from energy upstream and energy upstream and downstream. downstream.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Policy I mperatives Policy I mperatives

DISCARD DISCARD EMBRACE EMBRACE

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SLIDE 42

A Look at the Oil A Look at the Oil I mporters I mporters

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Context Context

  • Caricom countries consume 900 trillion

Caricom countries consume 900 trillion BTU of energy per annum BTU of energy per annum

  • Petroleum products constitute over

Petroleum products constitute over 90% of energy consumption 90% of energy consumption

  • T&T only net exporter of oil in the

T&T only net exporter of oil in the region region

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Market Characteristics Market Characteristics

  • Power generation

Power generation dominates total dominates total energy demand. energy demand. 13% 13% Haiti Haiti 41% 41% J’ca J’ca 31% 31% Bdos Bdos 40% 40% StLucia StLucia 25% 25% Dominica Dominica 37% 37% Guyana Guyana 20% 20% Suriname Suriname % share % share

  • f Power
  • f Power

Country Country

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Market Characteristics Market Characteristics

  • Energy imports absorbs a

Energy imports absorbs a significant % of foreign exchange significant % of foreign exchange earnings. earnings.

– – OECS < 10% OECS < 10% – – Larger economies> 20% Larger economies> 20%

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Market Characteristics Market Characteristics

  • Petroleum products are heavily taxed

Petroleum products are heavily taxed

  • 11 members of Caricom participate in

11 members of Caricom participate in PetroCaribe accord. PetroCaribe accord.

  • Varying levels of debt accumulated

Varying levels of debt accumulated across the regional economies. across the regional economies.

  • Deterioration in the quality of life.

Deterioration in the quality of life.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

OECS Retail Gasoline Prices (EC$) OECS Retail Gasoline Prices (EC$)

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

I mpact of Economic I mpact of Economic Meltdown Meltdown

  • Typically economies run counter

Typically economies run counter cyclical to the T&T economy when the cyclical to the T&T economy when the external shock is only about energy. external shock is only about energy.

  • However global recession has also hit

However global recession has also hit the tourism product hard, therefore the tourism product hard, therefore affecting entire region affecting entire region. .

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

I mpact of Economic I mpact of Economic Meltdown Meltdown

  • Lower energy prices will bring

Lower energy prices will bring welcomed relief welcomed relief

  • But, the decline in Tourism and Travel

But, the decline in Tourism and Travel likely to nullify that benefit . likely to nullify that benefit .

  • Recovery is possible in the Travel and

Recovery is possible in the Travel and Tourism industry within two years. Tourism industry within two years.

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Policy I mperatives Policy I mperatives

  • Must avoid the complacency usually

Must avoid the complacency usually associated with lower oil prices. associated with lower oil prices.

  • Implement Regional Energy Policy :

Implement Regional Energy Policy :

  • Promote Renewable energy technologies

Promote Renewable energy technologies

  • Seize opportunities for use of Carbon trading

Seize opportunities for use of Carbon trading and the CDM. and the CDM.

  • Energy conservation initiatives

Energy conservation initiatives

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Policy I mperatives Policy I mperatives

  • Economic Transformation

Economic Transformation

– – Develop People based vision Develop People based vision – – Greening of Tourism Greening of Tourism – – Promote agri Promote agri-

  • tourism and

tourism and cultural/heritage tourism in general cultural/heritage tourism in general

  • Regional Cooperation

Regional Cooperation

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1 April 2009 1 April 2009 ILO Tripartite Conference ILO Tripartite Conference

Policy I mperatives Policy I mperatives

DISCARD DISCARD EMBRACE EMBRACE

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SLIDE 53

Thank You. Thank You.

Contact Info: Phone 1-868-682-4348 mcguire.gregory@gmail.com Gregory.mcguire@sta.uwi.edu