What does a war in the Middle East have to do with the price of gas in Jamaica?

Now you might be thinking, “I live in the Caribbean. The Middle East deh far from mi.”

But unfortunately, oil doesn’t understand geography.

Now, when things get tense in major oil producing regions, global oil prices can jump. And because Jamaica imports most of the fuel we use, we feel it pretty quickly.

And this isn’t just me saying it. The IMF recently described the Caribbean’s dependence on imported fossil fuels as a major macroeconomic vulnerability.

In the Eastern Caribbean Currency Union, imported oil products account for 96 percent of primary energy use.

So when oil prices jump, it isn’t just the man at the gas station who feels it.

Transport costs go up. Businesses pay more to operate. Electricity can become more expensive. And eventually, somebody has to pay the bill.

Jamaica has been trying to cushion that blow.

Earlier this year, the Government said international fuel prices could have translated into roughly $49 more per litre, but only about $18 was passed on to motorists, with Petrojam absorbing much of the difference.

And that sounds good. But here’s the catch. The bill didn’t disappear.

Petrojam absorbed the cost, and the Government warned that maintaining the protection could cost as much as $11.8 billion if elevated prices continued.

So the question becomes: how long can we afford to absorb the shock?

The IMF estimates that a 25 percent increase in international oil prices could push inflation in the Eastern Caribbean Currency Union up by about 0.4 percentage points, while widening current account deficits by as much as 1 to 1.5 percent of GDP.

That is why this isn’t just a conversation about gas prices. It is about economic security.

We can’t control what happens in the Middle East. But we can reduce how much oil we need to import.

More renewable energy. Better energy efficiency. Better public transportation. A more diversified energy mix.

The best protection from an oil shock isn’t just finding a way to make the shock cheaper.

It’s reducing how much of that shock we have to take in the first place.

And that is the Bottom Line.

So what do you think? Should Jamaica start preparing for the next oil shock before it happens?