Jamaica: If we should find oil, then what?

Over the last three months, the Government has been hinting at the possibility of oil in the territorial waters of Jamaica. The Prime Minister, in at least one media report, was quoted as saying she wanted all Jamaicans to pray for the discovery of the precious commodity.

Given that it is the electoral silly season, such pronouncements do give rise to scepticism, as our politicians are known to pander to the wishful in times like these. For those concerned about national development, and know of the penchant of our government to spend wantonly, we must ask, would Jamaica benefit from this prospect?

Jamaica, as a non-oil producing country, falls into the category of countries vulnerable to what economists term ‘oil shocks’. An oil shock is an energy crisis where a great shortfall or price rise in the supply of the energy-producing commodity occurs in an economy.

The crisis often has effects on the rest of the economy as many recessions are precipitated by an energy crisis of some form. In particular, the production costs of electricity rise, which raises manufacturing costs, and concomitantly, the price of basic commodities.

Jamaica Gleaner