EDITORIAL - Mr Shaw on energy

Mr Audley Shaw, the finance minister, had a fair bit to say about energy and its use in Jamaica when he opened the Budget Debate 12 days ago.

An essential part of his thesis was that Jamaicans use energy inefficiently and have to do better.

"While this might sound trite," Mr Shaw exhorted his fellow citizens, "I must repeat that it is time for every Jamaican to do everything in his/her power to conserve on the use of electricity. Turn off the light bulbs, use energy-saving bulbs, turn on the water heater 15 minutes before you need it, and engage in pool driving to work."

The last suggestion, to which we will return, is crucial.

Mr Shaw's concentration on energy is significant. Imported oil accounts for more than 90 per cent of the country's energy needs. The country imports more than 77,000 barrels of the stuff a day, for which, when prices are rising, it can spend more than US$2 billion a year.

The economics of oil, therefore, carries significant implications for the national accounts. For example, in his Budget presentation, Mr Shaw noted that a US$97.7-million, or a 9.1 per cent, increase in fuel imports last year, after a decline in 2009, largely contributed to a US$35.3-million deterioration of the current account deficit, to US$947.1 million, or 6.7 per cent of gross domestic product.

In the right direction

So, the Government, Mr Shaw informed the country, is doing something about the matter. It, for instance, is getting a US$350,000 grant from the Inter-American Development Bank "to identify and address energy efficiency in the public sector".

Another energy audit, requiring investment of US$13 million, with a payback of less than four years, has identified potential savings to the economy of US$30 million a year. Additionally, the World Bank is lending Jamaica US$15 million "to finance an energy-security and efficiency-enhancement project".

This all seems that Mr Shaw's is a government with a clear grasp of energy issues, headed in the right direction. That is, until you come to another part of the finance minister's presentation: his tax package.

Here, he announced reductions in the duties on motor vehicles. Those on gas-guzzling sport utility vehicles will drop, for 2.0cc to 3.5cc ranges, by nearly 50 per cent. On small to mid-size cars, the decline will be up a nearly a quarter.

revise transport culture

Transportation consumes between 25 per cent and 30 per cent of the oil imported by Jamaica. It is reasonable to assume it accounts for that portion of the oil bill which, during the high prices of 2008, would have been US$810 million. Private motor vehicles are responsible for a hefty portion of that.

In the circumstance, it would seem to make sense that the Government's energy policy pay close attention to public transportation to minimise the use of private vehicles. Hence, Mr Shaw's carpooling suggestion, for example, and a greater use of buses.

Instead, the signal is for people to buy cars that burn expensive oil, plus the import cost of the vehicles themselves.

Well, what should we expect?

The Government has announced that Jamaica will transition from oil to liquefied natural gas as our main petroleum source, but refuses to share with the people the technical basis of its decision.

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