There has been much written about this topic both by those in favour and those vehemently against. While the viewpoints are usually well substantiated, I have not seen what I consider a business assessment of the pro’s and con’s. In line with this objective, I list issues below for consideration:
PRO’s
- Provide a diverse source of income to the Government
- Provide a revenue stream to allow Government to repay its Debt
CON’s
- Climate Change – Paris Accord
- Price of oil
- Demand for oil
- Potential for oil leakage
Pro items are as outlined above – i.e. provides another revenue source as opposed to relying so heavily on Tourism. This revenue stream will, in turn, allow the Government to repay its high-level of indebtedness. Both of the above “Pro’s” however do not necessarily lead to positive benefits for the Country. Specifically look at Venezuela and note the state of its economy. The results of the management (?) of its oil revenues have been disastrous with many social programmes funded out of sale of future oil production with an end-product of colossal debt to the point of the country being in default and the nation’s people many of whom live in abject poverty among conditions where basic essential imports cannot be acquired and paid for.
Con items are more clearly defined and quantified. The Bahamas was a signatory to the Paris Accord on climate change an understandable position as an increase in the current ocean levels would put large parts of The Country of the under water. The essence of the Paris Treaty was to obtain global efforts to reduce and eliminate the use of fossil fuels. The impact of these initiatives has resulted in a sharp reduction of the price of the commodity. This will result in The Bahamas receiving less revenue than it may have anticipated. The reduction of the price of oil has been due to the lack of global demand. Again, we have been advised that there is a significant shift – e.g. motor vehicles being propelled either by electric batteries and or hydrogen. Similarly Generating power plants are changing from fossil fuels to sun power, wind power, nuclear fusion etc. As a result, demand for oil is going to continue its downward trend for the foreseeable future. Drilling for oil is subject to the potential for leaks which cannot be entirely eliminated, in fact, the likelihood is increased as the Bahamas will not be able to “live” off the flow of only one well – it would not be economically viable. For Commercial purposes several wells would have to be drilled thereby exponentially increasing the odds of spillage.
Without doubt the attraction of The Bahamas to our tourist visitors is the sun, sand and clarity of our swathes of turquoise waters. I have had the fortune of visiting many other locations in the Caribbean which cannot compare. Many of the larger Caribbean Islands have internal rivers which result in the washing of silt and debris into the ocean. The conclusion therefore is straightforward. With the nebulous “pro’s” and definitive “con’s” there is no other sane conclusion than to disallow drilling.
Yours
Fair and Balanced
The views expressed are those of the author, and not necessarily those of Weblog Bahamas (which has no corporate view).
