Trinidad & Tobago economy may be negatively impacted by the increase of U.S. shale oil and gas production

Trinidad & Tobago’s oil and natural gas resources have made it one of the larger economies of the Caribbean, but a recent analysis in Petroleum Export suggests that the twin island republic’s economic security could be under threat from one of its major export markets.

According to a recent Reuters report, the United States is enjoying an “energy bonanza” thanks to shale gas, making it a magnet for industry and in turn reducing import dependence.

“The U.S. internal energy revolution and the radical increases in production of oil and gas have boosted gas production by 25 percent and seen oil import dependence drop from 60 percent to 40 percent, and expected to decline further to 30 percent,” said Carlos Pascual, the U.S. special envoy for energy affairs.

What are the implications to Trinidad & Tobago?

Trinidad & Tobago’s economy is powered by natural gas and oil. The industry accounts for about half the country’s gross domestic product (GDP), generates nearly two-thirds of the government’s revenues, attracts most of its foreign investment and lines the sovereign wealth fund. The country’s decision to export its gas has served it well, making it one of the wealthiest nations in the Caribbean. The United States has been one of the largest markets for Trinidad & Tobago’s oil and gas.

With increased local production in the United States and a reduced importation of oil and gas, Trinidad & Tobago will need to develop a long term strategy, and look for other markets globally, however, in the medium term, there is a likelihood that there is a reduction in revenue coming to the twin island nation.

Source: Caribbean 360