Oil and Gas in Trinidad and Tobago: Managing the Resource Curse in a Small Petroleum-Exporting Economy

Foreword
Contents
Abbreviations
List of Figures
List of Tables
1 Introduction and Overview of Study—The Challenge of Managing Oil
	1.1 Purpose of the Study
	1.2 Rationale
	1.3 Objective and Layout
2 Economic History of Oil Exploration and Production in T&T, 1857–2020
	2.1 Introduction
	2.2 Oil Based Economic Activity in the Period 1908 to 1928
		2.2.1 Exports
		2.2.2 Royalties
	2.3 1929 to the End of the Second World War
		2.3.1 Exports
		2.3.2 Royalty and Wayleave
	2.4 The Second World War Up to the Dawn of the First Oil Boom, 1945–1972
		2.4.1 Staple Exports
		2.4.2 Contribution to Output and Employment
		2.4.3 Royalties
	2.5 1973–2020: Boom Bust Boom Bust
		2.5.1 Petroleum Sector GDP and Crude Oil Value Added in Particular
		2.5.2 Employment in Crude Oil exploration and production
		2.5.3 Exports
	2.6 The Oil Industry and Global Warming
	2.7 Conclusion
	References
3 History of Oil Refining in T&T
	3.1 Introduction
	3.2 Before Texaco: The Period Before 1956
		3.2.1 Refinery Output
	3.3 Texaco and the Years Ahead
		3.3.1 Crude Oil Imports
		3.3.2 Refinery Output and Capacity Utilization
		3.3.3 Employment
		3.3.4 Gross Domestic Product
		3.3.5 Production of Refined Petroleum Products
		3.3.6 Exports Destination of Refined Products
	3.4 State Ownership of the Refinery to the Present
		3.4.1 Refinery Capacity Utilization
		3.4.2 Exports
		3.4.3 Oil Refinery GDP
		3.4.4 Oil Refining Employment
	3.5 Conclusion
	References
4 Natural Gas Production
	4.1 Introduction
	4.2 National Gas Company (NGC)
	4.3 Production and Utilization of Natural Gas in T&T
	4.4 Liquified Natural Gas (LNG) in T&T
	4.5 Conclusion
	References
5 Resource Curse and the Dutch Disease
	5.1 Introduction
	5.2 Resource Curse (with a Focus on Petroleum Products)
	5.3 Dutch Disease
		5.3.1 The Dutch Disease and Premature Deindustrialization
	5.4 Dutch Disease and Sectoral Trade Performance
		5.4.1 Long-Term Impact on Growth
		5.4.2 Oil Prices and the Real Effective Exchange Rate—Some Econometric Evidence
	5.5 Conclusion
	References
6 The Petrochemical Sector of T&T: With Reference to the Methanol Industry in T&T
	6.1 Introduction
	6.2 The State as an Entrepreneur in Trinidad
	6.3 Black Power Movement and the First Energy Boom
	6.4 Real Value Added in the Petrochemical Sector
	6.5 Methanol Blending?
	6.6 Conclusion
	References
7 Dutch Disease, Baumol Disease and Labour Productivity in a Small Petroleum-Based Economy
	7.1 Introduction
	7.2 Structural Change and Economic Growth
	7.3 The Dutch Disease and the “Baumol Cost” Disease—Call the Doctor
	7.4 The Baumol Cost Disease in T&T
		7.4.1 Data Overview
	7.5 Shift Share Methodology
	7.6 Empirical Outcomes
	7.7 Conclusion
	References
8 An Assessment of the Macroeconomic Landscape: 1955–2020
	8.1 Introduction
		8.1.1 Trends in Basic Macro Economic Variables
	8.2 Towards a Greater Dependence on the Petroleum Sector
	8.3 Petroleum Is a Sunset Industry Globally
	8.4 Petroleum Is a Sunset Industry Locally
	8.5 Conclusion
	Reference
9 Rent Absorption in the T&T Economy
	9.1 Introduction
	9.2 Reduce the Pace of Rent Absorption by Modifying the HSF
		9.2.1 Understanding Consumption and Investment Decisions in a Small Capital-Starved but Resource-Abundant Economy
	9.3 The HSF in T&T
	9.4 What the HSF Balance Could Have Been
	9.5 Inefficient Application of the Hartwick Rule: Tertiary Level Education Funding
		9.5.1 Brief History of Tertiary Level Education Funding in T&T
		9.5.2 GATE Petroleum Rents and the Hartwick Rule
	9.6 GATE Recession and the Hartwick Rule
	9.7 Income Contingent Loan
	9.8 Conclusion
	9.9 Make Work Programs
		9.9.1 Public Work Programs and Surplus Labour
		9.9.2 A Closer Look at the Economy at C and D and the Effects of Public Work Programs
	9.10 Underemployment Costs from C to D
	9.11 Conclusion
	References
10 Policy Interventions to Boost Competitiveness of the NBT Sector
	10.1 Introduction
	10.2 Devaluing the Currency?
	10.3 Improving the EODB Environment
	10.4 Lessons Learned from Other Developing Economies
		10.4.1 Interventions for Consideration by T&T Policy Makers
	10.5 Building on the “Rybczynski” Gains from Venezuelan Migrants
		10.5.1 More Widespread Use of Spanish to Help Promote Trade with Spanish Speaking Neighbours
		10.5.2 Change in GDP
		10.5.3 Impact on LFPR, Ageing Population and Increasing Dependency
	10.6 Making Use of Our Trade Agreements
		10.6.1 Establishing and Trading with the Economy’s Natural Trading Partner
	10.7 ETECK Parks
	10.8 Other Enabling Environmental Changes
		10.8.1 Fiscal Responsibility Legislation (FRL) and a Fiscal Council
		10.8.2 Economic Development Board (EDB)
	10.9 Specialized Economic Zones (SEZ)
	10.10 Public Procurement
	10.11 The CSO and Evidence-Based Policy Making in T&T
	10.12 Conclusion
	References
11 Benefitting from Existing Comparative Advantage: Maximizing Economic Rents
	11.1 Introduction
	11.2 Promoting Even More Deepwater Exploration
	11.3 Modify the Supplemental Petroleum Tax (SPT) and Incentive Regimes in T&T to Encourage Production
	11.4 Providing Joint Ventures Between Huge and Small Producers
	11.5 Secondary And Tertiary Oil Recovery Techniques
	11.6 Reopening the Refinery at Petrotrin
	11.7 Cross Border Gas
	11.8 Local Content
	11.9 Farm Out/Lease Out Program
	11.10 LNG Transfer Pricing
		11.10.1 Regional Labour Market Possibilities
	11.11 Conclusion
	References
12 Conclusion: After 100 Years of Producing Oil and Gas
	12.1 The T&T Economy is at a Crossroad
References
Index