Energy Decline in Latin America Already a Reality in 2017

Erasmo Calzadilla (with Demian Morassi and Anibal Hernandez)

HAVANA TIMES — The annual BP Statistical Review of World Energy report has come to light, and this is a time when several friends and I take advantage to try and understand and communicate what is happening with the energy sector in our continent (excluding the US and Canada)*.

In the first study, two years ago exactly, we began with a wake-up call about our extremely high and clingy dependence on fossil fuels, especially oil.

It seemed alarming to us because these raw materials which we are addicted to aren’t renewable, and production has been steadily declining for a while now.

Normal comments resonated on the lines of: “You don’t have to worry, Venezuela has the largest oil reserves in the world” or “We are a continent with an abundant wealth of renewable energy resources which will substitute fossil fuels”… things like that.

That’s how the majority think because they have been confused by the media. And governments? They are also walking on clouds or hiding their real intentions from us. As far as we know, not a single country in our surroundings has undertaken preventative measures to mitigate the chronic crisis which is on the horizon. On the contrary, they are stepping on the gas hoping that their economies grow and as a result, they can keep the toxic dependency they have intact.

 

The decline in fossil fuels, which threatens peace and prosperity within the region, has been the result of a combination of factors. The most well-known is the go-slow of the global economy – which leads to divestment in the energy sector. Another important factor is the political and social crisis that great producers face: Venezuela, Mexico and Brazil.

Without detracting value from the above, it is important for us to highlight a more deep-rooted cause: better quality and more accessible fossil fuels have already been extracted, following market “logic” and the growing voracity of industrial societies. It is becoming more and more difficult to convert the raw materials that are still in the ground into a commercial product. As a result, the process is becoming less profitable from an energy standpoint. It is happening in the Americas and across the whole world; no provider on the other side of the sea is going to be able to take us out of the fire.

But, let’s get back to our continent. Two years ago, we compared production values and oil consumption and we estimated that consumption would begin to fall around 2017, trapped by the drop in production.

And we were right. This dramatic event which will spark so many social and economic disruptions is already happening.

Then we applied the same procedure to total energy, considered to be the sum of all the sources. Once again, we announced that the zenith wasn’t far off and we were right again. It isn’t because we are math geniuses and peak oil experts but because we are basing our analyses on the right estimates, something which the media and government analysts don’t do in their ridiculous reports.

And what about renewable sources? Weren’t they going to compensate for the decline in fossil fuels? Let’s see if it’s possible.

To get an idea of whether renewable energies can avoid the disaster or not, we carried out a small “investigation”. Drawing from statistics reported by BP up until 2016, we compared the curves of energy production according to different criteria. Fossil fuels falling in a straight line (mathematical predictions and concrete figures suggest that this fall will become sharper), nuclear and hydroelectric energy, remaining stable (another white lie) and renewable sources growing exponentially. The result is shown in the following graph.

That is to say, choosing the most optimistic of scenarios – optimism which borders on fantasy – we would have to wait until the 2040s for “other renewable sources” to make up for the decline in fossil fuels. Over thirty years with the economy constantly on the decline without collapsing… hard to imagine right? On paper it might seem possible, because of all the abstractions we’ve done, but it’s almost impossible in practice.

The problem is that other renewables** haven’t been developed enough yet, they aren’t enough on their own, and the raw materials needed to develop them are also in shortage. They have managed to expand thanks to the enabling environment that was created by the oil boom: economic growth, social stability, investment flooding in I + D, mega-mining which allows the extraction of rare-earth elements…, but when these factors fade, their development will slow down and maybe they will never take off.

Conclusions

Ladies and gentlemen, tighten your seatbelts because it looks like the party has just begun. Governments in our countries won’t react to energy alarm bells and when they try to, it’ll be too late. All of the efforts to mitigate the impact of this decline lie in the hands of individuals and communities.

However, let’s take a look on the bright side: the crisis will end capitalism and the saga of demons that accompany it. Or as they like to say in my neighborhood: the good thing about this is that things are already going bad.

Of course, nothing guarantees that a more fair and humane system will follow.

In our next study, we will show the dimensions of this disaster in more detail.

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*The US and Canada weren’t included in our analysis because their characteristics (economically rich countries and great producers) distance them too much from the rest of the continent. They need a separate chapter.

**Other renewables refers fundamentally to solar and wind power.