Use war windfall to ease unaffordability

Dear Editor,

It must be very terrifying, especially to the half million poverty-stricken Guyanese hearing His Excellency Irfaan Ali cold-heartedly beseeching them to “brace yourself” for the onslaught of more sufferings, even though the Govt is euphorically raking in close to an extra $1Billion every day under the radar since the Iran war started. Aside from his cop-out that this is a “global problem” and an “import of inflation”, the President offers nothing for relieving the average Guyanese from his promised escalation of unaffordable living.

It is a brazen spin to blame Guyana’s unaffordability crisis on this war; since, it is common knowledge that the nation faced runaway inflation for the past six years. The editorial pages have assiduously chronicled the irony of Guyana being the world’s fastest growing economy while amongst the most impoverished with its people crying out about unaffordability: 58% poverty rate, escalating food prices, humiliation of cutting back on meals, indignity of choosing between basic necessities, Pensioners rationing medicine, highest children malnutrition rate in the Caribbean and Latin American Region, unaffordable housing, and hike in transportation fares.^[1]

As the President matter-of-factly warns, things will get painfully worse, not only because of higher fuel prices and shortages that underlay inflation of all essential goods and services, but also because of further spiraling food shortages and prices due to hold up of one-third of the world’s fertiliser brought about by the war.

Since the war started, oil prices have jumped from $67 to so far peak at $120 per barrel, with reputable international sources such as Bloomberg warning to “Brace for $200 oil if war lasts until June”^[2]. Using a conservative estimated average increase of $30 per barrel and an oil production rate of 930,000 barrels oil per day (bopd), Guyana’s share of the extra war windfall approximates close to G$1 Billion per day and over $G 50 Billion since the war started.

Not to belabour the universal consensus of Exxon’s ripping off of Guyana via the Stabroek Block Production Sharing Agreement (PSA), the brutal truth is that while Guyana is doled out chicken feed from its own God given oil patrimony, Exxon and its partners grab 86% of that patrimony which, not only rescued the company from financial collapse, but revived and maintains its behemoth financial stature.

Since Guyana doesn’t have an oil refinery, all of its 930,000 bopd are hauled abroad, leaving Guyana having to buy back fuel refined from its own oil, while Exxon swims in profits from refining and selling the refined products. Plainly, while Guyana suffers, Exxon laughs all the way to the bank making a killing off of Guyana’s oil during crises such as the Iran war. Guyana is said to consume approximately 27,000 barrels of fuel per day, which is a mere 3% of what it produces. In other words, the obscene reality is that Guyana can’t even get back a piddly 3% of its own oil for its survival, while Exxon prospers from it.

The good news is that the bonus war windfall no doubt provides the means for the Govt to immediately take decisive actions to bring relief to its people’s plight of unaffordable living. Notwithstanding the long-term strategy to have an oil refinery, the following two recommendations for near term relief are presented below for urgent consideration:

1. Use half of Guyana’s extra $50 Billion war windfall to subsidize the soaring cost of living through a special emergency cash grant, or via the targeting of vulnerable groups; and to repeat same during the life of the war. Noteworthily, such an initiative will obviously not negatively impact the 2026 national budget plan. Besides, as recently reported, Minister Zulfikar Mustapha recently revealed that “with fertiliser prices surging globally, discussions are already underway to roll out support measures similar to previous fertiliser assistance programmes.” If the Govt could see it fit to provide such relief for farmers, then, it is only fair for all other impacted groups to be accorded the same benefit.

2. Similar to a Bill being introduced by Congressman Brad Sherman of California to ban the export of US oil, except to send it to refineries where it is refined and sent back to the US, Guyana must demand per an addendum to the PSA, that Exxon allots Guyana its full supply of refined fuels – an amount currently equivalent to a teeny-weeny 3% of the oil shipped out of Guyana. Notwithstanding Exxon’s home country draft legislation, this is the least decent thing that Exxon could do for a poor country that bends over backwards sacrificing its people’s wellbeing to bankroll and maintain the financial security of filthy rich Exxon. As even the most powerful USA realises, it is foolhardy to be producing such large quantities of oil in your country, but have fuel shortages that gravely hurts your economy. Hence, if the richest country can take such a necessary action, why shouldn’t poor Guyana!

References

1. Overview of Poverty in Guyana ↩
2. Brace for $200 Oil If War Lasts Until June, Macquarie Warns — www.bloomberg.com ↩