Reeper posted:Baseman posted:Reeper posted:Baseman posted:
I believe they are profitable, the big ones at least. Guyana has a high cost and this needs to be addressed. They need to benchmark with other low cost producers and dissect their cost structure and adopt best practices.
The govt also needs to explore added value down streaming. As KP said, they should consider bringing back some elements of F in the FCH program.
What about govt subsidies? Put that oil money to use productively.
Subsidies should be used if and when appropriate and not to prop inefficient operations. Oil monies should be used to build infrastructure and an efficient power grid to bring down overall cost of doing business.
Question, when the US gives out subsidies to farmers, how do they determine that they are not propping up inefficient operations? Maybe this could be a model to leverage.
They actually do. The USG sets certain floor pricing based on data over time and also other countries. The subsidies are to ensure domestic food security. All developed nations do that as basic food commodities exist in a perfect mArket condition, as such, profits go to zero unless there are shortages. No govt wants shortages but actually some overproduction. That ensures food security but also drives prices to -0-. The excess is then ”dumped” on the spot market. Few countries provide subsidies for export as a policy. Guyana and other 3rd world situations are different however, subsidies make sense if you are exchanging local costs for forex.
You cannot just simply copy policies without getting to the purpose why countries chose to do certain things. The imperatives could be different.
In the case of Guyana, productivity and efficiency should first be addressed then subsidies, if needed.