President Obama’s Carnival Tuesday speech reiterated his intention to make the US self-sufficient in energy. Remember that the US is a massive importer and user of oil and natural gas-we export substantial amounts of natural gas.

Our Minister of Energy, Conrad Enill, recognising that our market for natural gas in the US may become constrained, reassured us that there are other markets that pay even higher prices than the US. What the Minister ignored is the impact of this reduction in global demand for exported energy on prices of natural gas and oil in general.

Recall that the high prices that fed the good times in T&T (GDP growth) depended on the inability of the oil producers to meet the rapidly escalating global demand exacerbated by that of China and India. President Obama told us that he intends to spend US$15 billion per year to develop the technologies of wind, solar and clean coal and with the continued lifting of the ban on US drilling his aim of US self-sufficiency is achievable.

Note Republican Senator Brownback’s comment-that renewable energy remains a small part of the US energy portfolio and that there is need to discuss the role of coal and nuclear power as base energy sources as well as the production of US oil and gas.

Though the US President has not directly referred to nuclear energy it is instructive to listen to Jacques Besnainon (of France’s Areva, a builder of the new generation of nuclear reactors). Besnainon expects Areva to be involved in constructing in the US at least one third of the new US nuclear energy plants.

At present seven plants are under consideration by energy companies and licence applications for four have been submitted to the US Nuclear Regulatory Commission. It is well known that France is more reliant on nuclear energy that any major industrialised country. As a result, it has one of the lowest carbon emissions per capita of any developed country and low electricity rates compared to the rest of Europe.

Another important contributor in the EU to the improving attitude to nuclear energy is that electric utilities in Western Europe will have to start paying for their emissions credits come 2013.

Also, Poland that now relies on coal for 95 per cent of its power generation has plans to build two nuclear plants by 2020-26 which would generate 20 per cent of that nation’s electricity. Note that nuclear energy can also produce all the traditional fuels for our current transport system (’It is not a bomb’, Express, January 26). Further, Iran is commissioning a nuclear power plant so as to free up some of its oil for export. India has an agreement with the US to establish nuclear plants to supply electricity.

China with its huge stock of ’Sovereign Wealth Fund’ cash and still able to keep imports below exports, has been bargain hunting internationally for cheap global resources due to the financial crisis. China has given a US$25 billion loan to Russia whose economy went into a tailspin with the fall in oil and gas prices, on the promise to supply China with 200,000 barrels of oil per day for the next 25 years and to build a pipeline to China. Brazil was also given a US$10 billion loan on a pledge to supply China with 160,000 barrels per day of oil and Venezuela signed a deal to also supply one million barrels per day by 2015 for US$4 billion to top up its existing development fund.

What is startling is that the big energy producers, who racked up large amounts of cash in the boom, immediately became beggars in the bust-Russia, Venezuela and Brazil. The same has come about for other commodity producers-Rio Tinto and OZ Minerals of Australia, Tanganyika Oil of Canada. The T&T Government has already begun to borrow to make ends meet.

When the world comes out of this economic recession the energy market will be on track to the provision of a mix of reasonably priced energy options that will effectively relieve the Peak Oil crisis which initiated the global economic slowdown. The question is, then, is it sufficient for the Government to simply wait out the bust, hoping to continue selling high-priced petroleum/products into a radically changing market?

The petroleum energy market, like the horse drawn carriage was, is now at its cusp. On the up-tick of the global economy the expectation is not for phenomenally high oil prices as in 2008. Hence the Government will again fail us if the transformation of the on-shore sector is neglected, if we fail to provide the top layers of the sustainable economic pyramid, if our national innovation system is not implemented to create the new products and services.

maryking@tstt.net.tt