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OPINION: Oil futures below zero; meaningless to most Guyanese

By GHK Lall

Oil prices, the futures to be precise, went into negative territory for the first time in their volatile stormy history. For many it is like the end of the world. Yet, here are Guyanese lost in the impenetrable hazes of their own little world, who could care less. The bounty bestowed on us is now worth nothing, at least temporarily, and still we remain unfazed in our interests, undeterred in our foolishness, and unmoved in our priorities.

The US West Texas Intermediate (WTI), one of the main oil pricing benchmarks, puts the price at below zero, while Brent, which Guyana uses, was Tuesday morning at US$21.34 and heading downwards.

For those watching us and our antics and follies, this does not come as any surprise. I am not surprised that we remain so blissfully ignorant, so committed to the retardations that reduce us to less than men of stature and convert us to craven creatures condemned to eternal blankness. This is what we love and are proud to be. For if a virus that has succeeded in forcing the world to its knees and to a standstill did not instill any kind of sense into us, then why should or could anything else, such as the mundane irrelevance of oil tumbling below zero a barrel. We Guyanese have bigger fish to fry, the same one that has been afflicted with acute food poisoning for almost fifty days now.

I must confess that though I pay close attention to such things, I was caught napping; and I was not in any way distracted by elections nonsense and elections machinations. I gave myself a slap on the head for that, since some overseas moves are now too late, and for which I must pay a steep price. But the point of my writing today is that over which we battle so endlessly, so furiously, so possibly fatally, is now not worth as much as a vial (or supertanker) of urine.

The very thing over which we fight, over which we drool and dream, and over which we make beautiful calculations is virtually worthless. And though it promises to rebound, as it will do eventually, the jarring reality of this moment should not be lost on anyone, who still possesses some thinking prowess in this society. Exxon and the rest that went public to say that it is business at undiminished speed in Guyana did not present the whole truth. I say this because the reports are of not so subtle on scaling back of some operations; a limited basis, yes, but scaling back definitely.

That was when oil was hovering back and forth in the mid to low twenties. I am not Goldman Sachs by any measure, but I had serious concerns—problems, really—with first its below $15 a barrel and then year-end thinking of $10 a barrel. Well, those oil watchers and sages have to be cursing themselves for the extreme accuracy of their forecasts. In fact, yesterday broke into uncharted waters, it made the river run dry. All the leading news authorities, the New York Times, the Wall Street Journal and their lesser brethren, were compelled to use such words as “unprecedented” and “historic” and so forth.

Now, though it would be lost on most locals, what has skidded here are the futures, which are the contracts on delivery in future months and further, and not current prices. Storage capacity is the chief reason. But unless demand, which has fallen precipitously because of COVID-19, returns to some semblance of strength in the near future, it could be the longest days yet that are ahead. The virus appears to be finally easing up (my words) in the global epicenter of the scourge, which is New York City, where the death toll for a day fell below 500 for the first time this week.

Nevertheless, New York’s Governor Cuomo is already sounding the guarded optimism that it would take years to bounce back to anywhere close to where things were prior to the presence of the virus. Like any patient, who came so perilously close to death’s bed, recovery is a slow and shaky process, with stops and starts, and sometimes relapsing back into intensive care. Let us hope that that is not the case, even when a vaccine is still over a year away, by the most optimistic of calculations. 

So where does this leave us Guyanese? I regret to say in the same benighted and bleak place that is consumed by elections, that we pretend at games over something called democracy, and think that we are wiser and slicker than everybody else. Regarding that bit about democracy, we are sick (maybe terminally) and we can’t even recognize that; but we dare to claim expertise and awareness of what it takes to be a democracy and of things democratic.

Oil prices are not democratic, they are of the tyrannies inflicted upon the hubristic and the careless, the sometimes too smart for their own good. That would be the Russians for a start, with Guyanese coming in a close second. If a life threatening virus that is here does not wake us up, means nothing to many of us, then I am unable and unwilling to see how negative oil futures could register on our consciousness, given the denseness that is the national mentality, the national psyche. Oil futures are below zero, which Guyanese care?

Mr GHK Lall is a Guyanese author, columnist and former financial analyst on Wall Street.