Apart from the petrochemicals industry, many of the new industrial establishments are operating below capacity due to difficulties encountered in both the export and home markets. As the Minister of Finance complained in his 1966 Budget Speech.
Local manufacturers continue to encounter some resistance from the local distributor and consumer even where the product was undoubtedly competitive in quality and price. Our limited domestic market offers no scope for such habits of snobbery, and Government will continue to make use of all the instruments available to break down the prejudice. The problem is assuming greater urgency in view of the restrictions which continue to be imposed in foreign markets on the exports of Trinidad and Tobago.
Part of the problem however lies in the lack of dynamism in the export promotion programme. Also the P.N.M. as a mass party, has been woefully negligent in not actively mobilizing public opinion behind the “buy local” campaign.
Perhaps the most worrisome feature of the economy is the performance of the critical oil industry which is responsible for 30% of Government revenues, 30% of G.N.P., 80% of total export value, but only 5% of total employment. Despite recent increases in indigenous crude production due to secondary recovery techniques and successes in marine drilling, it is feared that time is running out on the Trinidad industry. Unless new sources of indigenous are found soon, the industry may very likely go into liquidation or be forced to rely on refining capacity alone. One company, British Petroleum, has already announced its intention to cease all drilling operations in 1968 on the grounds that returns are not sufficiently re warding. Recent estimates of proven crude reserves – 500 m barrels – indicate that at present production rates – 50 m barrels per year – only 10 years of additional production remain. Today the industry is in fact largely a refining industry, Whereas only 5. 7% of crude supplies were imported in 1931, in 1966 about 30% was being imported largely form Venezuela (35%) and Saudi Arabia. As the 1963- 64 Report of Commission of Enquiry into the Oil Industry of Trinidad and Tobago noted:
An elaborate refining industry has grown on the island and today present the principal safeguard for the future of the oil industry in Trinidad. Trinidadian oil has remained competitive, in spite of its high cost of production by virtue of the low cost of its refining operations.
The Report went on to add that due to a complex geology, the difficulty of interpreting geophysical data and the small productive potential of wells, “the cost of production is high compared with many producing areas in the world”. Whereas wells average 41 barrels per day in Trinidad, an average of 4,000 is obtained in the Middle East. The oil companies also note that to be economic, wells must yield at least 80,000 barrels compared to the average of 26,000 in Trinidad.
The problem of low reserves of crude is com-pounded by the fact that oil prices have been under pressure since 1958 when the price stood at $3 U.S. per barrel. Increased production in Africa. the Middle East and the Soviet Union, and discounting practices have today created a buyers’ market. Since 1958, the prices dropped steadily and in 1965 hit a record low of $2.38 U.S. They have bounced back up to $2.91 in 1966 as new producers begin to behave more “responsibly”. but the prospects for stabilization are not good. An additional complication is to be found in the fact that the E.C.M. and the Caribbean to which much of Trinidad’s oil (.44 of world output) was exported, are becoming “self-sufficient”. The E.C.M. is now refining 90% of its needs, and refineries have been established in Jamaica, Barbados and Antigua; another is being planned for Guyana. New sources of energy are also providing close competition and reducing demand for additional refining capacity.
The consequences of the oil crisis are already noticeable, and great concern is the fact that Government revenues are declining as profits from oil fall. The Treasury also earns 2% times more on the refining of indigenous crude than it does on imported crude. Imported crude also affects the balance of payments. Moreover, as local crude production declines in importance, more and more workers are being retrenched despite an overall increase of about 63% in refinery between 1958 and 1965. Between 1956 and 1962, employment in the industry fell by about 2,300. Early in 1967 two European owned oil companies announced that they intend to reduce their work force further by another 1,850. Texaco, the largest of the operating companies, has not retrenched since 1962, but has not been increasing its work force which it claims is redundant to the extent of over 30%. In the context of the growing unemployment crisis, these figures, seemingly small, assume critical proportions, especially since other industries, especially sugar, are doing the same. In industries employing 50 people and over, employment declined from 80,900 in 1957 to 78,500 in 1963.
Needless to say, reduced economic activity in the private sector has been forcing contractions in the public sector which has retrenched around 8,000 daily paid employees since the end of 1966 (election year). Pay increases for monthly paid Government employees in 1966 no doubt exacerbated the difficulties being experienced by the public sector. The country and the P.N.M. have clearly begun to panic over the crisis, and everywhere one hears the complaint that “an air of depression and worry has settled over the nation. The economic outlook is gloomy.”
The wisdom of continuing dependence on the Puerto Rican “branch plant” model of economic development in the light of these alarming trends is being seriously questioned, especially since the experience of Puerto Rico itself is not heartening. In Puerto Rico as in Jamaica “industrialization by invitation” has resulted only in the development of a relatively well paid unionized working class “aristocracy”, co-existing with a growing army of unemployed people, who are worse off because of the inflationary pressures on the economy. The P.N.M. has however refused to countenance any departure from the Puerto Rican system, and has deliberately turned its back on the Cuban model which it believes has not yielded any solutions that are not practicable in an orthodox two party system.
Williams refers to the Fidelistas as “middle class misfits directing guerilla bands . . . . and claiming to act in the name of the workers and farmers’. Castro, he believes has made a “blooming mess” of the Cuban economy. Discussing the alternatives presented to Trinidad, Dr. Williams declared that:
“The Trinidad and Tobago Government and people have sought, and believe they have found, a middle way between outright nationalization and the old-fashioned capitalist organization backed by the marines and the dollars of the United States of America.”
That middle way is an active partnership between Government and major foreign investors in both the formulation and the achievement of the Government’s development targets and the Government’s social objectives. The view of the Government of Trinidad and Tobago is that it is impossible to nationalize an economy which depends on foreign trade more than most countries do, and whose limited domestic market of 900,000 people could not possibly absorb the total production of large-scale industries such as petroleum and sugar, which, combined, contribute over ninety per cent of the total export trade. The inefficiency of much more modest efforts in the field of public ownership of public utilities is, in any case, an inauspicious beginning to public ownership of basic industries, the capital needs of which would seriously interfere with the requirements of Government financing of the public sector of the economy.”
Williams has consistently argued that the human, physical and financial resources of Trinidad are inadequate to a programme of nationalization. Some measure of dependence is inevitable, whether on the West or on the East. Genuine neutralism is not a feasible alternative in the Americas. It is a case of ‘either – or’. and Williams believes that with more financial and trade assistance from Western governments, Trinidad could expand its industrial and agricultural production sufficiently to ameliorate its unemployment problem in the near future. It is estimated that about $600 m would be needed to do the job.
“Trinidad and Tobago’s relative undevelopment in terms of the inaccessibility of a large part of the country’s limited physical area, differentiates it from its neighbours in that the possibility is there, once the financial resources are available, for bringing new areas into cultivation, thus enabling the country to carry, more easily, ten or twenty years from now, a much larger population than the present population which it carries with some difficulty today in the limited areas which have so far been developed”.