Introduction
Last week’s column revealed that in 2015, even as Guyana approaches half a century of Independence, several classical features of its colonial economic structure remain intact by global standards. These are its smallness (or even micro); poverty (or even impoverished); highly (or excessively) open to external influences; and exceptionally dependent (to say the least) on export and import trade in primary commodities. This latter continues to hold firm, even though individual products would have changed in their absolute values and relative rankings over the years. Today and in coming columns I shall explore several aspects of Guyana’s commodity trade. I shall start with oil imports, paying substantial attention to the Venezuelan PetroCaribe Agreement. As we shall observe more fully later this agreement is related to Guyana’s oil imports and its exports of rice.
Special marketing arrangements
Before continuing, a word of caution; for decades, a distinguishing feature of Guyana’s external commodities trade has been that it has been largely undertaken in regulated/protected markets, not free ones. Having indicated last week that a key drawback of trade in free global commodities’ markets is their commodity cycles and revealed volatility in prices and quantities traded and the transmission effects of such fluctuations on national economies, one must therefore conclude that Guyana has been quite fortunate in that, for most of the period since Independence, the bulk of its commodities’ trade has not been in global free markets. Instead it has been undertaken through special trade and marketing arrangements of one sort or another. Most notable of all has been, for sugar, the EU-ACP Sugar Protocol and its successor; versions of the US Tariff-rate Quota-system; and Caricom’s sugar marketing arrangements.
However, because of its topicality l shall begin with the PetroCaribe Agreement. This agreement covers trade in rice and oil, and a background on these is provided below.
Background: World situation in rice
In today’s global rice market, forecasted global output for the crop-year 2014-2015 is expected to be 476 million tons (milled basis). The highest global output of rice on record is 477 million tons, which was reached in the crop-year 2013-2014. Guyana’s total output in 2013 was just over 535 thousand tonnes, which is minuscule by global standards.
The global acreage in rice is forecasted at 161 million hectares for the crop-year 2014-2015. This is the highest acreage on record and compares to Guyana’s relatively paltry 165 thousand hectares. The average global yield is forecasted to be 4.4 tons per hectare for the same period. However, Guyana’s rice yield in 2013 was only 3.2 tonnes. Guyana’s export of rice in 2013 was 395 thousand tons valued at US$240 million, for an average price of US$607 per tonne.
Forecasted global consumption of rice for the crop-year 2014-2015 is 482 million tons. The global ending stock is projected at 104 million tons to give an ending stock to output ratio of 22 percent. Rice prices for major grades (India 5%; US long 4%; Thailand 100% B) are forecasted to decline revealing the broad pressures on global commodity markets during recent times.
World situation oil
For convenience the global supply and demand for oil (and other liquid fuels) is revealed in Tables 1 and 2. The information is sourced from the US Energy Information and Administration (EIA).This shows total global supply and demand for oil at just over 90 million barrels per day. Indeed global supply has been 90.2 and 92.0 million barrels per day in 2013 and 2014 respectively and is forecast to reach 92.8 million barrels per day during this year. The Organization of Petroleum Exporting Countries (OPEC) has supplied 36 million barrels per day in recent years or about 40 per cent of the total. The US is projected to produce about 15 million barrels of crude oil in 2015. Other significant non-OPEC producers are Russia (over 10 billion barrels per day) China (4.5 million barrels per day) Canada (about the same) and Mexico 2.8 million barrels per day.
TABLE 1: Major Global Oil Producers 2013-2015*
Producer (million barrels/day) 2013 2014 2015
Global,
of which 90.2 92.0 92.8
USA 12.3 13.9 14.9
Canada 4.1 4.4 4.5
Mexico 2.9 2.9 2.8
China 4.5 4.5 4.5
OPEC 36.0 36.0 36.0
NON-OPEC 54.1 56.0 56.8
Eurasia 13.6 13.6 13.5
North Sea** 2.8 2.8 2.6
Russia 10.3 10.3 10.3
Notes * = oil and liquid fuels, 2015 forecast;
** = Europe offshore supply
Source: US Energy Information Administration
For readers’ information the five European North Sea offshore suppliers referred to in the tables are Denmark, Germany, Netherlands, Norway and the United Kingdom. The twelve OPEC members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab Emirates, and Venezuela. OPEC presently accounts for about 40 per cent of total supply and the USA about one-sixth. Table 2 below shows that for 2015 the USA is forecast to consume about one-fifth of global output (19.1 million barrels per day) followed by China with 11.3 million barrels per day.
Against this background, I shall address the present crisis in global oil markets next in order to place the PetroCaribe Agreement in a wider global context.
TABLE 2: Major Global Oil Markets 2013-2015
MARKET 2013 2014 2015
Global 90.5 91.4 92.3
NORTH AMERICA, of which 23.4 23.4 23.5
USA 19.0 19.0 19.1
SOUTH AMERICA, of which 6.9 7.1 7.2
Brazil 2.9 3.1 3.2
EURASIA, of which 4.7 4.7 4.6
Russia 3.3 3.4 3.3
MIDDLE EAST 7.9 8.1 8.4
ASIA & OCEANIA, of which 29.9 30.4 30.7
China 10.6 11.0 11.3
Japan 4.5 4.4 3.8
India 3.7 3.8 3.9
AFRICA 3.4 3.5 3.7
