Not many Jamaicans may know of T. Boone Pickens, the Texan oil billionaire turned evangelist for "green energy". But he is the type of entrepreneur that Jamaica needs now if we are to escape the suffocating energy equation in which the local economy is trapped.

In this equation, the additional foreign exchange spent each year on the oil bill has been running ahead of the increase in export earnings; a far worse position than what has shocked Americans into taking action to escape their energy trap.

T. Boone Pickens has been leading a campaign to persuade American business leaders and the government to back the development of wind and solar power as major sources of future electrical energy supply. He is also pushing natural gas to be a major fuel for transportation because America has sizeable reserves; and it is a clean fuel that would boost energy efficiency. Together these sources are seen as the best long-term options, along with revolutionary battery technology, to free America from its growing dependence on foreign oil and deal with climate change.

Sense of urgency

The sense of urgency indicated in the Pickens' and other energy plans stands in sharp contrast to the lack of interest by Jamaican business leaders or, for that matter, Caribbean enterprises. This is puzzling, considering America's vast endowments of energy sources compared with Jamaica's energy, resource poverty. While Americans possess coal, oil, natural gas, hydro-power and geothermal source we are almost totally dependent on foreign oil. They also utilise atomic energy. And they have begun to exploit wind and solar power, which could evolve to a massive scale.

Where is the Jamaican T. Boone or private-sector visionaries ready with ideas and the investment appetite to take on the different components of the energy solutions? Is it that Jamaican entrepreneurs see no solutions, or that they dare not risk their capital? Couldn't they find foreign partners with whom to form joint ventures to invest in alternative energy sources where first-mover advantage could be attractive?

Invested in ethanol

As far as I am aware, we have no private-sector leader or investor locally that has given this kind of thought to the energy issue. Why is this so if energy is a key impediment to the viability of businesses and economic growth? Jamaica Broilers has invested in ethanol production and Carib Cement had some years ago diversified its energy source to include coal, but no visionary ideas or plans have come from the business sector. Presumably, these are to come from the public sector, never mind that the private sector is meant to be the "engine of growth".

Though the local business people complain about preferences given to foreigners, for which there is hardly ever any proof, it is to these investors that we will have to look if locals do not come forward. As I pointed out in last week's column, Jamaica's energy consumption per person in 2003 was 84 per cent more than in 1987. Our energy intensity in producing goods and services also rose alarmingly by 50 per cent.

And lest we are tempted to maintain our lethargy, all of this is in a context of what is now agreed will be a long-term upward trend in oil prices.

The picture of how Jamaica's oil bill has moved over the past decade is astounding. In 1997, the bill stood at US$354.1 million, less than half of the gross value of bauxite/alumina exports, or a little more than half of the inflows of remittances. By 2000, it had reached US$ 906.8 million, an increase of 156 per cent surpassing bauxite exports by, nearly US$ 200 million, and remittances by US$120 million. Then we had the gargantuan movement to US$2 billion by 2007, which totally wiped out the benefits of the spectacular increase in remittances from US$790 million to US$1.96 billion in the same period.

In other words, the massive inflows from remittances, which ought to have provided a boost to the country's foreign reserves and resources for investment, were completely eaten up by an energy, inefficient economy. Still worse was in store, as in 2008 the oil bill went up by 35 per cent, to US$2.7 billion. A remarkable fact is that the increase in the oil bill that year was greater than the sum of our export earnings from sugar, rum, traditional agricultural crops, crude bauxite and some other lesser items as well.

Hefty oil bill

Looking back over the 20-year period to 1987, what we see is an oil bill that has gone up more than 10-fold, while virtually nothing has been done to fundamentally alter our total dependence on oil. Nor have we bothered to address the efficiency of energy use. Instead, we are burning more oil to produce each unit of output even as it has got more costly. And this is being done by businesses whose primary motive should be to make greater profits.

We cannot of course ignore the cost of an inefficient public power supply system, and that the choice of private motor cars over public transportation involves public policy decisions. But the imperviousness of the Jamaican business approach to the energy trap demands close examination, for things must change, or much of our productive capacity will be unsustainable. Not to mention that if energy costs eat up more of each dollar of income, most people are bound to get poorer.

Dennis E. Morrison is an economist. Feedback may be sent to columns@gleanerjm.com.