WHILE THE West desperately searches for ways to reduce its fuel cost and thus its reliance on Middle East oil, it seems that despite its efforts, OPEC members plan to have the last laugh.
As the US tries to find ways to turn its purchasing power away from Mid-East oil, the oil minister of Saudi Arabia has made it clear that his country– the world’s largest oil producer – plans to go solar so that it can free up more domestic oil for export.
During the summer months, the Saudis “burn as much as one million barrels a day of crude oil ¬– about 10 per cent of their current production – for their own power consumption,” according to an article by Benoit Faucon in Monday’s Wall Street Journal.
(On Monday the Wall Street Journal devoted a 10-page supplement to the oil crisis as the price of fuel reaches breaking point. It is well worth reading).
“Oil is not the kingdom’s only energy wealth,” boasted Saudi oil minister Ali al-Naimi. “Saudi Arabia is blessed with an abundance of sunshine.” Such realities, he said, “make solar energy a natural, logical focus.”
And so while the West searches for ways to reduce their need for Mid-east oil, Mr al-Naimi, sees “renewal energy sources…helping to prolong our continued export of crude oil.”
In the Bahamas Leslie Miller, new BEC chairman’s one ambition is to reduce the Bahamas’ annual $360 million fuel bill, and the annual $12 million payment in overtime to BEC employees — the highest paid corporation in the country. He fully understands that Bahamians cannot continue to carry the load.
He recognises that the cost of electricity has threatened our tourism product by making it less competitive. This is obvious when one considers that in the United States — where they are complaining that prices are too high — the Bahamas with its kilowatt-hours costing about 35 cents plus cannot compete with US prices that range from 9.1 cents to about 17 cents per kilowatt hour— even these price increases many Americans find too much.
In the Christie government of 2002 to 2007 Mr Miller was shot down when he went to sign a deal with the Chavez government, which would have tied the Bahamas to Chavez’ Petro Caribe agreement, which was a loan agreement for cheaper oil, with many political strings attached. There was no way that such a deal could fly.
However, it is understood that Mr Miller now believes that he can avoid the Petro Caribe agreement by negotiating cheaper terms to purchase the oil from Freeport’s holding tanks at the Bopac terminal. According to Mr Miller’s thinking, shipping the oil from Freeport will also reduce transportation costs.
However, the US has fired a warning shot across Mr Miller’s bow. They fear that he could get too close to the Chavez orbit, resulting in the Bahamas being entrapped in the Venezuelan net. Mr Alex Sokoloff, the US Embassy’s political and economic officer, could not see Venezuela selling its oil at a cheaper price without a long-term credit burden or political strings attached.
“There is no such thing as cheaper oil,” Mr Sokoloff warned. Prime Minister Christie has also expressed discomfort that one of his ministers might be paddling in hostile waters, and getting beyond his depth.
Nor is Mr Miller too happy about the oil drilling proposals in Bahamian waters — in this he has the backing of many Bahamians, including members of his own party. Mr Miller is not satisfied with the track record of Bahamas Petroleum Company, which the Christie government has confirmed has fulfilled all its requirements for an explorer’s licence for another three years. The government now wants to hold a referendum to get Bahamians’ views on the drilling.
All oil drilling is risky. There is no company that can honestly say that they have a safe operation and that Bahamians need fear no pollution of their beautifully clear waters. After the BP oil spill in the Gulf of Mexico in 2010 no can ever again say that an accident can never happen.
BP was a company with what was believed to have been a good track record — as good as any oil drilling company could get. However, according to court documents recently released by the United States Department of Justice, which is investigating the accident, BP has been condemned for “gross negligence.”
The Department of Justice’s battle to hold BP financially responsible accuses it and its Swiss-based partner, owner of the Deepwater platform that caused the accident, of “gross negligence and wilful misconduct” in its assessment of the events leading up to and following the explosion. The sinking of the platform left an open well out of which gushed more than 4.9 million barrels of crude oil over an 87-day period. Can anyone imagine that happening in the Bahamas?
Bahamians are deeply concerned. A young Bahamian called us to suggest to Mr Miller that he investigate buying energy from Florida Power and Light — after all, he said, if FPL can pump energy to California, why can’t a subterranean line be run to the Bahamas to keep the lights on in these islands?
Many years ago the late Edward St George was investigating the same arrangement with Florida Power and Light for Grand Bahama. It never came off, but we do not recall why.
Anyway, as this young Bahamian suggests, this is another avenue that Mr Miller could explore.