Introduction
At this point, with the 2020 finale, I think it would be helpful to readers if I move on at this point to repeat what I am in this fairly lengthy analysis of the impact of the global 2020 global crisis (as I am defined this process) on Guyana’s emerging oil and gas sector. With Guyana First Oil published about a year ago (December 20, 2019), my first column on this topic had appeared back on March 22, 2020.
I intend to undertake this recapitulation by focusing on the four sub-topics under which I have structured my analysis. These are: 1) defining the essential features of the global 2020 global crisis, as I have categorized this term 2) reviewing the 2020 results and future prospects for the global crude oil sector 3) evaluating the impact of 1 above, on the economy and crude of Guyana oil sector and 4) setting out several strategic choices that I had advised that the Authorities needed to make before the end of the 2020s.
General Crisis 2020
Based on the above approach, I think it is helpful for readers to recall how I presented this task in the March 22, 2020 column. To quote: “Global and internal confessions seriously attack the oil and gas sector of Guyana. These have called the metaphor… the baptism of fire and brimstone ”As noted in that column, my main concern was that the current reports on the emergency exposures in various print and social media were hysterical, to say the least. Often, the reporting ranged from a thin “glee and delight” about the upcoming misfortunes facing the baby sector and Authorities, to “doom and gloom” based on the mantra that what was unfolding in the public arena is typical of the doomed narrative of failing “Petro States”!
However, my overriding concern then and now is the need for a thoughtful evaluation of the evolving circumstances given my conviction that Guyana’s baby oil and gas sector is facing an extremely serious global crisis. From its earliest manifestations, the crisis has displayed four clear fingerprints. These are indicators of a simmering global financial crisis; a deepening global economic crisis; explosive crude oil crisis; as well as the crisis of global political economy. The latter has encompassed the challenges of economic growth and distribution; investment and returns (profits); as well as failing to meet the global sustainable development goals, SDGs.
Emergency Drivers
In order to lay the rationale for my proposed evaluation of the impact of the general 2020 crisis on Guyana’s baby oil and gas sector, I needed to identify at the outset exactly what I considered to be the key drivers of that development process. I still hold five drivers, individually and collectively, as primarily responsible for shaping the main contours of the general crisis as well as for synergistically integrating the social forces that drive it. These drivers are presented in random order, in what follows in this section.
The first of the drivers I had identified in my column last March was based on my observation that there were worrying signs, starting as far back as late 2019, of a weakening in the “global bull market” for investors ”who were so hyped at the time. In fact, I felt that those signs marked the demise of the economic boom of about a decade, which had already lasted from the end of the Great Depression of 2007/2008.
Initially, the second driver was considered a public health epidemic. However, this had transpired in a few weeks to the Covid global pandemic 19. This pandemic in turn has triggered the onset of the worst global economic recession since the Great Depression of the 1930s. In short, a public health crisis had leaped in weeks to a complex multi-dimensional crisis, which is why I apply the term, “universal” in reference to it.
The third driver, I had noted, was a de facto dilution that is widely recognized in so-called “OPEC + other countries”, a joint marketing stance for crude oil. And, in particular, there has been an “oil price explosion” between the Kingdom of Saudi Arabia and the Russian Federation. As we already know, oil price shocks have always, on balance, tended to divide global economies into “winners and losers”. In the global circumstances at the time, this split of the fortunes of countries was intensified by low interest rates and inflation, worldwide. These low rates impair the ability of the Authorities, mainly financially, to contain adverse outcomes. Historically, too, sudden changes in oil prices have always echoed world stock markets. Fourth, the knock-on effect of all of the above is on global “swing oil producers”, especially the US oil shale sector.
Fifth and finally, there are those long-term structural challenges that all future high carbon energy sources will face. Global concerns about climate change coupled with a growing geopolitical “option” for renewable energy sources are shaping the future energy mix. Indeed, such pressure has been severe enough, to have led to the prediction that this year, 2020, could end by being the only fourth year that global demand for oil will contract since the mid-1980s!
Following the specification of the global general crisis I had moved on to an extended evaluation of its five main drivers over ten columns (March 22 to May 24, 2018)
Collection
Based on a repetition above my extended outline of the global 2020 general crisis, next week I will seek a similar repetition of the second sub-topic noted above.