IntroductionMr Speaker, one of the most pressing issues facing our beloved nation today is the need to find solutions to our energy crisis, starting with the implementation of our National Energy Policy. Let me from the outset indicate that this Administration is committed to affording our nation the prospect of cheaper and more environmentally friendly sources of energy. Additionally, energy efficiency and the development of local energy resources, especially economically competitive sources of renewable energy, will become major parts of our approach to resolving our energy crisis.
The Jamaican economy is currently heavily dependent on imported fuel. As a net importer of fuel the country is therefore susceptible to the volatilities of the world oil market – both in terms of supply and the price of oil. And it is clear that in order to minimize these effects on the economy, we must diversify our energy base.
Oil ImportsDuring calendar year 2009, Jamaica imported 22 million barrels of oil for which we spent US$1.3 billion. This is a marked reduction compared with 2008, when US$2.8 billion was spent on oil imports. We must appreciate that this drastic reduction was largely due to the downturn in the bauxite and alumina sector, which saw the closure of three of the four alumina plants.
For calendar year 2008 the Bauxite and Alumina Sector accounted for 9 million barrels of oil or 31 per cent of total petroleum imports, while for calendar year 2009 it only accounted for 3 million barrels of oil or 14 per cent of total petroleum imports.
Impact of Higher Oil Prices Higher oil prices also have a significant impact on our balance of payments and the current account deficit. The deficit in the current account, Mr Speaker, measures the extent to which Jamaica is depending on the rest of the world to satisfy our import needs. During the period under review the current account deficit is projected to drop to an accumulated total of US$3.7 billion.
Increased energy prices also fuels inflation. Every Jamaican consumer – business persons and consumers alike are aware that there is a snowballing effect of increased energy prices on all goods and services consumed. Increased energy prices results in higher electricity prices and transportation costs for the delivery of goods and services to all Jamaicans, whether we live on the plains of St. Catherine, Clarendon and Westmoreland or in the hills of St. Thomas, Portland, St. Mary or the interior of other parishes.
It is therefore incumbent on all of us as a nation to develop a national consensus on the way forward in lowering the cost of energy as a major input in the overall cost of production. And it is in this context that work has been undertaken in recent years in the development of a comprehensive National Energy Policy. Read more…
