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Honourable Minister Clive Mullings, MP Minister of Energy- Sectoral Presentation 2008

 

 

July 1, 2008

 

BREAKING THE DEPENDENCY

Salutations:

 

Thanks to constituents, family and Ministry staff.

 

INTRODUCTION

There is no substitute for energy. The whole edifice of modern society is built on it. .. It is not “just another commodity” but the precondition of all commodities, a basic factor equal with air, water and earth.  – E. F Schumacher (1973)

 

ENERGY DRIVES DEVELOPMENT

 

GLOBAL CONTEXT

Mr. Speaker, the energy sector is a major part of the global economy and has been the focus of much discussion in recent months. We need to have an understanding of what is taking place and the impact of oil on emerging economies, such as Jamaica.

 

World Demand

In 2007, world demand amounted to 86 million barrels per day. The demand is trending upwards while at the same time there is a decline in the rate of new discoveries.

 

There is also the constant fear that the supply of this commodity may be disrupted either by acts of God or man. It is important to note Mr. Speaker, that the majority of the world’s oil reserves are located in regions that are politically unstable and subject to tension.

 

The fundamentals of demand and supply are also being distorted by Paper Traders. Stock positions are taken up online and traded without actual money passing through the traders’ hands. Additionally, the weakening US dollar has created a window for traders to turn oil, this finite product, into the new currency. The market, therefore, is vulnerable to the mere hint of a disruption in supply.

 

These are the factors driving the price of oil upwards and creating A CRISIS OF CRUDE.

 

We have no control over these factors but we must find a solution. The answer, Mr. Speaker, is to break our dependency on oil.

 

A dependency that is crippling us.

 

The statistics are stark.

 

The total amount of oil imported in 2007 was 29.9 million barrels compared with 30.9 million barrels in the previous year. The reduction resulted largely from a marginal decline in production in the bauxite alumina sector influenced largely by Hurricane Dean. Mr Speaker, we should note that even with this reduction in import volume the cost to import increased from US$1.84 billion to US$2.01 billion.

 

How was the commodity used?

 

21% of the volume imported was used for road transport, 23% in the generation of electricity 6% for other manufacturing and 50% supported the export sector in the areas of bauxite and alumina production and for marine and aviation travel.



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