Dark Future for Puerto Rico

Dark Future for Puerto RicoThis morning as I was just about to start writing about the 10 things you can do to survive the energy crisis, when the lights went out at home. I then had a very bad premonition. A premonition so bad that it's been haunting me all morning. And because I'm such a giver, I thought I would share my premonition and bum out the rest of your day too.

Just imagine for a second that petroleum continues to rise in price. And if you didn't already hear, it hit another record high yesterday to $138,54. This was mostly based on continued instability in the Middle East and the subsequent prediction by Morgan Stanley that prices may reach $150 within a month.

Puerto Rico's Economy

The 2008 energy crisis is killing Puerto Rico's economy. A continuation of that trend will only accelerate that effect and place it on life-support. There are three basic legs to the Puerto Rican economy: Government, Tourism, and Manufacturing (specifically Pharmaceuticals); extremely high energy costs would take away two of those legs (tourism and manufacturing). And no one can stand on one leg for too long before falling down completely, well unless Puerto Rico's economy is a flamingo.

We are already starting to see the impact of rising petroleum on the airline industry, which counter to what you are hearing in the local news, will directly impact the tourism industry. If you look at any Caribbean islands tourism strategy, adding more flights is ALWAYS at the top of the list, maybe second only to adding more rooms. So it only goes to follow that less flights, means less tourists. Remember less IS ALWAYS less.

One of the main reasons so many manufacturing facilities are closing up shop, beside the disappearance of the last vestiges of 936, is the rising price of energy on the island. An important component of the newly signed incentives package that the Governor signed is a subsidy to pay for energy. If petroleum prices continue to rise it will nullify the impact of the incentive or it will bankrupt the government. Either way, rising energy cost will force more manufacturing off the island.

Way too little - Way too late

So a monkey could have predicted last week's' pronouncement by Acevedo Vila and Fortuño that they were "committed to seeking alternatives that would alleviate Puerto Rico's dependence on oil." But the time have made those pronouncements was probably about 8 to 12 year's ago. Of course it is hard to fault anyone when big oil continues have their way with the executive and legislative branches of the United States, as was just witnessed by the Senate successfully stopping a vote on the climate change bill.

According to the Governor, 74% of Puerto Rico's energy is produced by the burning of petroleum, where as the average use of petroleum in the United States is only 4%. Reasonably speaking, it will take decades before Puerto Rico is about to reduce the amount of petroleum it consumes to produce energy. And unfortunately, by then our economy may be completely unplugged from life support.

My Premonition

So as I sat there momentarily shocked by the blackened house, it hit me. Imagine what it would be like if black-outs in Puerto Rico became MORE frequent. Imagine what it would be like if gasoline was $3.00 a liter. Stop and consider for a moment having to drastically rearrange your life, just so that you could save energy, save gas, live closer to work, or move off Puerto Rico, just to make ends meet.

I'm now beginning to believe that it wasn't Rogelio Figueroa who was smoking something when I dogged his suggestion that making Puerto Rico independent from foreign oil was the key to Puerto Rico's long term economic security. And also my hat goes off to Gabriel Pagan over at "I can't spell" for nailing the same solution.

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