Dear Editor,
Hedging oil at US$66 a barrel is a complete waste of money — money which the country can ill afford — and makes absoletely no sense. This money, US$26 million, should have gone towards expanding the capacity of the Petrojam oil refinery, thereby creating meaningful jobs and curtailing the importation of well-needed petroleum products into the country.
The past or present Government shouldn’t have heeded the advice or recommendation of Bank of Jamaica Governor Brian Wynter and the Financial Secretary Everton McFarlane. Weren’t these the same guys who predicted that oil prices would go through the roof this year? This hasn’t happenned. What is so bothersome is that successive administrations bought into the idea. It is like it’s no better herring, no better barrel — no pun intended.
If these so-called experts and analysts had followed the global oil trends and did some basic research and analysis, they would have known that this commodity has been trending down for quite some time. From back in 2014, to be exact, when a barrel of oil was fetching for as low as US$26, all data indicated that oil prices would remain flat for the foreseeable future. This for a couple of reasons namely:
* The Organisation of the Petroleum Exporting Countries’ (OPEC) biggest client, the United States, has become largely self-sufficient and is now the leading producer of oil in the world.
* Supply far outweighs demands,
* Renewable energy (solar, wind)climate change, electric cars, natural gas, and a huge global reserves.
OPEC and Russia better get used to the idea that US$100 per barrel oil is a thing of the past.
Next month OPEC will meet to reduce production in an effort to hike the price of oil. But, in my opinion, it won’t work because the large oil producers, mainly Saudi Arabia, will want to protect their market share.
Besides, huge oil finds are being discovered around the world. For example, here in the United States two large oil fields were recently discovered in Texas and Alaska, which spells more bad news for OPEC.
The price of oil currently hovers around US$50 dollar per barrel which, to me, is still overpriced. Before long I expect oil to be back in the US$30 per barrel range — where it belongs. After all it only takes US$4 to produce a barrel of oil in Saudi Arabia and with the lifting of sanctions, the Saudis arch-enemy Iran is now back in oil production for exports.
Noel Mitchell
Westchester, New York, USA
nlmworld@yahoo.com
Hedging oil at US$66 a barrel is a complete waste of money — money which the country can ill afford — and makes absoletely no sense. This money, US$26 million, should have gone towards expanding the capacity of the Petrojam oil refinery, thereby creating meaningful jobs and curtailing the importation of well-needed petroleum products into the country.
The past or present Government shouldn’t have heeded the advice or recommendation of Bank of Jamaica Governor Brian Wynter and the Financial Secretary Everton McFarlane. Weren’t these the same guys who predicted that oil prices would go through the roof this year? This hasn’t happenned. What is so bothersome is that successive administrations bought into the idea. It is like it’s no better herring, no better barrel — no pun intended.
If these so-called experts and analysts had followed the global oil trends and did some basic research and analysis, they would have known that this commodity has been trending down for quite some time. From back in 2014, to be exact, when a barrel of oil was fetching for as low as US$26, all data indicated that oil prices would remain flat for the foreseeable future. This for a couple of reasons namely:
* The Organisation of the Petroleum Exporting Countries’ (OPEC) biggest client, the United States, has become largely self-sufficient and is now the leading producer of oil in the world.
* Supply far outweighs demands,
* Renewable energy (solar, wind)climate change, electric cars, natural gas, and a huge global reserves.
OPEC and Russia better get used to the idea that US$100 per barrel oil is a thing of the past.
Next month OPEC will meet to reduce production in an effort to hike the price of oil. But, in my opinion, it won’t work because the large oil producers, mainly Saudi Arabia, will want to protect their market share.
Besides, huge oil finds are being discovered around the world. For example, here in the United States two large oil fields were recently discovered in Texas and Alaska, which spells more bad news for OPEC.
The price of oil currently hovers around US$50 dollar per barrel which, to me, is still overpriced. Before long I expect oil to be back in the US$30 per barrel range — where it belongs. After all it only takes US$4 to produce a barrel of oil in Saudi Arabia and with the lifting of sanctions, the Saudis arch-enemy Iran is now back in oil production for exports.
Noel Mitchell
Westchester, New York, USA
nlmworld@yahoo.com