He was not the first to raise the red flag, but Derick Latibeaudiere's observations last week about Jamaica's weak efforts at energy efficiency and conservation and the danger these posed to the Government's fiscal arrangement were worthwhile and timely.

According to the central bank governor, the country's oil bill, which reached US$2.2 billion last year, is likely to jump another US$500 million or approximately 23 per cent in 2008, about the same level as the previous year. Indeed, Jamaica, in US dollar terms, in 2007, paid nearly 50 per cent more for the oil it consumed than it did three years earlier.

A significant part of the problem, of course, is the sharp spiral in the price of oil because of the political issues in the Middle East and OPEC's continued discipline - some would say pig-headedness - in managing production. But the bigger issue has been our own laxity in crafting a long-term energy policy, and the politicisation of energy.

It is true that Jamaica is not unique in talking conservation and alternative energy during periods of high oil prices, then retreating to old, do-little positions when prices retreat. It is just that we tend to be better at it.

For instance, since the first oil shock of the 1970s, developed countries have made significant gains in energy efficiency, measured in terms of economic output per barrel of oil, by as much as a half in some cases. In our own case, the gain has been in the low double digits and all the achievement is due to the bauxite/alumina sector, where output per barrel of oil has increased by nearly 30 per cent. What this means is that the situation in the broader economy has grown worse.

So, from his vantage point at the Bank of Jamaica, Mr Latibeaudiere is growing worried about the rising oil bill, in the face of a public-sector deficit that will close the fiscal year at around 5.5 per cent of GDP. Indeed, the oil bill is nearly 70 per cent of merchandise exports and nearly 30 per cent of GDP.

Yet, we consume the stuff without restraint - about 27 million barrels a year, which accounts for 96 per cent of energy needs. Volume has shifted little in recent years, and any movement tends to be up. As Mr Latibeaudiere says, Jamaica is impacted by both volume and price.

The implications for the balance of payments and the Government's fiscal programme are obvious, which Mr Latibeaudiere says might be mitigated by inducing strong capital inflows. Or, we might spend the reserves to pay for oil.

A rapid growth of inflows is difficult, and burning up the reserves would leave the country badly exposed. But there is a third option to add to the mix: the depoliticisation of petrol.

There are some hard decisions to be taken, starting with policies to reduce consumption, which might include higher taxes at the pumps. Previous efforts at this in 1978 and 1999 led to politically inspired riots.

We have to get past this. In this regard, the energy policy should perhaps be placed on the agenda of the Vale Royal talks. There must also be aggressive programmes to drive energy efficiency, to use renewables, and to reorganise public transport. And, the efforts have to be sustained.

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