Monday, October 13, 2014

Myth - T&T Needs Big Government To Redistribute Oil & Gas Wealth

Trinbagonians have been comprehensively convinced by a state funded and controlled school system to believe that the T&T government must comprise a large percentage of the T&T economy to redistribute oil and gas wealth; otherwise T&T's patronage would be siphoned away by foreigners.
Overlooked however is current and historical government energy policy that imposes extremely high barriers to entry on companies wishing to enter the energy space ensuring only large multinationals can participate. 

These unnecessarily high barriers to entry include onerous and arbitrary regulations and bureaucratic procedures which ensure only the dominant companies in the global petroleum industry; and companies favoured by the state can participate. 

These barriers ultimately serve to exclude local companies from leading exploration activities even whilst the large international multinationals regularly outsource to local contractors. 

Consequently, energy production is consolidated in the hands of a few large favoured multinational and beleaguered state companies. This phenomenon then substantiates a government philosophy of imposing levies, royalties and taxes on multinational so as to "redistribute the wealth". 

Meanwhile multinationals still enjoy the lion's share of the country's wealth via direct dividends and profits as opposed to meagre rents, royalties and taxes collected by the state to supposedly be redistributed.

Had state policy not place locally owned businesses at a severe disadvantage versus international multinationals not only would more oil and gas exploration take place but locals would stand to benefit directly from T&T's wealth. 

Of course politicians and bureaucrats prefer this system of high barriers to entry as it grants them arbitrary decision making powers as "gatekeepers" which can be leveraged to their personal benefit at the expense of market entrants or the population at large. 

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