Imported fuels driving Jamaica to financial ruin?
Part 4 of an 8-part look at the pace and future of renewable technologies
Seeing is believing. If I tell you how big an impact imported fuels make on the country’s wealth you will doubt me, and therefore not make the effort to act on it.
But if I show you, and you immediately see the huge impact, you will be convinced to act.
So look at Jamaica’s growing and huge annual balance of trade (due to fuel imports) since 1980 at this link using the World Bank’s figures: http://www.theglobaleconomy.com/Jamaica/Trade_balance/
(Set the drop-down box to show "from 1980").
This one - http://atlas.media.mit.edu/en/profile/country/jam/ - has many graphs and is better for visuals, but its figures are slightly inaccurate.
It reported total imports in 2014 of $5.8 billion, in our approximately $14 billion-economy. The three types of reported fuels then appeared to show US$ 1.9 billion in imports, which was approximately 1/3 of all imports. Fuel for industry seems to be not included. The top imports were refined petroleum (US$1.2B), crude petroleum (US$598M), cars (US$165M), packaged medicaments (US$121M) and petroleum gas (US$99M). The reported 2014 trade gap was $4.39 billion.
Oil prices have dropped from US$80 per barrel since then (2014), and our trade gap has shrunk a bit to some US$3.2 billion due virtually entirely to this fuel drop, but is still very high.
Yes, you got your analysis right. By eliminating oil imports, our annual trade gap of over US$3.2 billion would disappear and our Jamaican dollar would stop devaluing.
Now look also at our shrinking purchasing power per individual, also since 1980, relative to someone in the USA, at this link: http://www.theglobaleconomy.com/compare-countries/ (On the drop-down boxes to the left, scroll down and select "GDP per capita, constant dollars". Scroll down further and select "Jamaica". Scroll to the right and select "from 1980").
Yes, seeing is believing! - Jamaica has flat-lined since 1980. Relative to someone in the USA, we have dropped from a quarter to one-sixth in earnings; poorer by fully 50 per cent; in lock-step with our widening trade gap. Our new "retirement funds" approach to the funding of solar and wind, outlined in last Wednesday’s article, potentially reverses that phenomenon as well as the trade gap.
A little history lesson here: Haiti, declaring its independence in 1804, the first black nation anywhere to do so, was forced to transfer 60 per cent of its wealth each month to its former "master" France for being so bold, or else! (France’s partner in crime, the then slavery-driven USA, did the enforcement with the firepower of ships). Haiti chose peace and was driven to financial ruin, has been left pauperised while France has prospered.
Jamaica transfers out some US$3.6 billion annually for fuel, near one-quarter of our wealth, to our "fossil fuel" masters. How then do you expect us to flourish and grow?! By contrast, US households spend just four per cent of their annual incomes on energy, a large portion of that being domestic fuels.
Drain one-quarter of our wealth annually? That is the impact of fuel imports.
The solution lies in eliminating fuel imports and instead using the massive amounts of "sun fuel" above us and "wind fuel" blowing around us.
But also hidden in the new results is that industry, particularly the manufacturing industry, would prosper now that increased manufacturing does not mean increased imports (due to the elimination of imported fuel for electricity). Low-cost electricity becomes the norm, generated from these variable-renewable-energy sources (VREs) of wind and solar. So more manufacturing ensues, and more price-competitive exports by these same manufacturers, which translate into more jobs as well as more foreign exchange. Alumina plants would also flourish, resuming their provisionof good-paying jobs.
If we all finance this solar and wind transformation of the existing electricity grid (by grouped household funds via a levy converted later to investment bonds), we also create growing retirement funds for every household, as explained in detail in last week’s article. We would all grow richer at the personal level, and wealthy at retirement.
Since this would be financed by households with a Jamaica Public Service (JPS) account, the financing of these new-age energy plants means spreading the wealth among all households, not restricting it to the already rich. Financial hope would return to small and medium-sized households as a result — not to mention low electricity prices — a powerful driver to reducing theft and burglaries (including theft of JPS power). Our rising crime should reverse, calming the entire population, including the better-off that live in fear. This reversal of fortunes can be achieved in just three short years.
Bear in mind that our annual fuel imports of some US$3.6 billion is split some one-third for JPS fuel, one-third transportation fuel, and one-third fuel for industry (for alumina companies, factories, and the like). This can be seen visually as a flow chart at: https://flowcharts.llnl.gov/commodities/energy (In the middle drop-down box, type in "Jamaica". When flow chart appears, click on it to make it bigger).
Are you now convinced to act?
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