It is causing inflation, water restrictions and congestion at airports.
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Introduction
Sometimes when you learn new terminology, you really do not comprehend it until you live it or see it in action. Well, when I was in college, I learned about the concept of the law of supply and demand in Economics 101. This was my first-time studying economics, and I did not quite grasp the concepts. In fact, I failed my first economics test.
According to Wilkipedia, “The law of supply and demand states that, for a given product, if the quantity demanded exceeds the quantity supplied, then the price increases, which decreases the demand (law of demand) and increases the supply (law of supply)—and vice versa—until the quantity supplied equals the quantity demanded.”
In the Turks and Caicos Islands and like many other countries, we are witnessing the law of supply and demand in action.
Inflation
The law of supply and demand is one of the factors that is causing the high level of prices in the Turks and Caicos. There is a significant demand for the rental of long-term apartments on the island of Providenciales, however, there is an inadequate supply of apartments. As a result, the price of apartments will increase. This is a great opportunity for residents to build apartments because the island is growing, and people are coming here for employment and need a place to stay.
Like the high cost of apartments, there is the high cost of food supplies. Virtually, everything is imported in the Turks and Caicos and the supply is limited and the cost of these supplies have increased. The cost of supplies has increased due to labour shortages and limited supply of some items particularly because of the Russian/Ukrain War. Despite the Government reducing duties on the basic goods, the cost of the supplies continues to be high and hence inflation rates.
Let us look at the hotel rates. The demand for hotel rooms is very high during the week of Christmas. Therefore, the rates for hotel rooms that week are very high. The rate for that same room is lower the week before Christmas and after Christmas. However, due to the demand, and the limited supply, the rates will increase, and people actually pay for that and many hotels are near full occupancy during that week.
Water restrictions
The law of supply and demand is also affecting our consumption of water. Our local water company Provo Water Company issued a statement informing the residents that there will be water restrictions until the end of April due to the extremely high demand for water. The CEO stated that more than 73million gallons were consumed in the month of March. Therefore, restrictions had to take place so that there could be supply for all their customers. I contacted Provo Water Company to understand why there were restrictions. He said there was an unusually high demand, and they were in the process from three years ago to enhance their infrastructure to accommodate the additional demand but due to COVID and the supply chain crisis, it delayed the process. However, the expansion has started and is expected to be completed this year.
I now have an appreciation for the cistern. During the construction of one of our projects, I asked why we need cistern when there is city water. Well, what is happening now is proof that we need city water.
Congestion at the airport
The law of supply and demand is creating congestion at Howard Hamilton Airport, especially on Saturdays. On March 16th, there was an unprecedented number of passengers and flight delays resulting and on March 23rd, passenger numbers were expected to exceed 10,000. Of course, the airport cannot currently accommodate these passengers effectively and efficiently. As a result, there is congestion at the airport. The construction of a new airport is well needed and quite frankly is behind schedule. However, hopefully within three years, the new terminal will be completed. In the meantime, we will continue to face the issue of congestion at the airport. Some may say reduce the number of flights, but it is easier said than done. I know the Airport Authority has cleared up space to accommodate more space for passengers, but it is still inadequate.
Influx of immigrants
Whether we want to admit it or not, the supply of jobs exceeds the number of working citizens in the country. There are not enough of us to occupy the jobs in the country. As a result, we must recruit and bring people to the country.
Do you remember the National Skills Audit that was done in 2017? According to the National Skills Audit, there were over 23,027 jobs and of that 8,589 are Turks and Caicos Islanders. Here we are in 2024, I am quite sure that the number has increased significantly. I know a lot of us complain about not having enough Turks and Caicos islanders on the job. It is because there are not enough Turks and Caicos Islanders in the country to occupy the jobs and so we must bring people in.
Conclusion
To be fair to the water company, about three years ago, the Water Company realized the increased demand, but their plans were interrupted due to the supply chain crisis.
The law of supply and demand is real. I encouraged individuals to embrace the incentives for apartments and build them to accommodate the demand.