“She Likes Gasoline”: On Latin America and the Coming Energy Crisis

Erasmo Calzadilla (along with Demian Morassi of Argentina)

HAVANA TIMES — Over the past ten years, reggaeton singers have changed the idea we’d long had about Latin American music. Their music videos are full of adrenaline, aggressiveness, sexual arousal, speed, fast motorcycles, sport cars, luxurious yachts and lascivious young men. One of Daddy Yankee’s popular pieces (where the title of this post comes from) offers us a clue as to the underpinnings of all this.

A few weeks ago, British Petroleum published its annual report [1] and, as it turns out, the reggaeton legend was right: we’re addicted to oil and its derivatives. Black gold accounts for nearly 50 percent of our energy diet, and we’re consuming more of it every year.

This is a dangerous and plainly unsustainable addiction. If we continue to “metabolize” this fuel at the pace we’ve set over recent years, our wells will be unable to quench our growing thirst in less than five years. Oil abstinence has an ugly face. If you don’t believe me, ask Greece, Syria and Yemen.

The long high-price season wasn’t enough to speed up the pumping of crude beyond a certain limit. Oil prices and oil production showed a rather stable pattern, confirming the thesis that the issue, rather than economic, is physical (geological and energy-related), and it’s harder to inflate statistics when you’re dealing with the laws of physics.

El deterioro de la industria petrolera en Latinoamérica es apreciable en lo concerniente a la refinería. Tanto la capacidad como el flujo de refinería cayeron escalonadamente a lo largo de la década; recuperarlas resultará difícil para una región cuya economía desacelera desde hace varios años.

The decline of the oil industry in Latin America is evident in the refining industry. Refining capacity and flow dropped steeply during the decade. To recover past levels will be difficult for a region whose economy has been slowing down for several years now.

The loss of refining capacity translates into dependency: in 2004, we were net exporters of oil derivatives (600,000 barrels a day). A decade later, we are net importers, importing approximately 1.6 million barrels a day.

In the ideal world that neoliberals dream of, there would be nothing wrong with this. In the real world, where the energy crisis is about to become fact, depending on distant refineries, in addition to costly, is highly dangerous.

Differences Between Countries

The production of oil, the fuel essential to economic development, is unevenly spread across the continent: some extract a lot of oil, while others none.

Producers, as was to be expected, consume significantly more oil than the rest.

If such inequalities persist, the economic divide will become even wider in the future and we can expect inter-regional conflicts to intensify.

Renewable and Other Sources of Energy

Renewable sources of energy (under which British Petroleum includes wind, solar, biomass and geothermal sources), grew exponentially over the past few years. Even so, in 2014, their contribution to the energy mix was still insignificant (2.8 %). It is well worth recalling that renewable sources of energy are used only to produce electricity, which does not constitute the of the major energy needs of modern societies. In many sectors, fossil fuels cannot be replaced as sources of energy.

Bio-fuels also grew at a healthy pace over the past ten years, at the expense of natural areas of extremely high ecological value (among other values) and by snatching lands used to grow food crops. Following so much destruction, one would expect to find a source of abundant and irreplaceable energy, but no, bio-fuels have reported extremely low performance (Brazil, the longest-standing producer, manages to produce anywhere from 2.5 to 9 liters of output for every liter invested [2], and their contribution to total consumption is quite ridiculous (2%).

Many are asking themselves whether bio-fuels, renewable or other sources of energy could compensate for the decline in fossil fuel supplies in the Latin American region.

The graph below shows energy consumption and production for all sources of energy and traces the predominant trends (assuming a linear behavior).

The graph is designed on the assumption that current trends will continue, something very unlikely. It is very unlikely because the drop in oil supplies will bring all other energy sources down with it. In addition, bio-fuels, hydro-power and nuclear energy will be thwarted in the short term by the physical limits of the system.

Even if we assume these “disasters” will not take place, energy consumption will overtake production in a very short span of time. Or, to be more exact, consumption (and, with it, the whole of the economy), will begin to adjust to the rhythm and ups and downs of production, without much room to maneuver.

Population studies bring to light another serious problem. Despite chronic poverty, or perhaps because of it, Latin America’s population is growing faster than energy production is. Energy production per capita has reached its peak and has been in decline since 2006. Consumption per inhabitant appears to have reached a plateau. Its collapse will have a serious social impact.

Conclusion

Despite having been well endowed by nature, the region’s energy panorama does not look too promising. If developments don’t change course (only a miracle could bring this about), economic and political crises will undo the precarious harmony the continent achieved in the past decade.

We need to look at the problem in the face and stop fantasizing about magical solutions. Neither the struggle against corruption or drug trafficking, nor renewable resources, nor fracking, nor progressive governments, will be able to avoid the unavoidable.

But it’s not all bad news. The high-voltage reggaeton music and consumerist culture that comes with it will meet the same end as gasoline, and, tomorrow or the day after, the survivors will once again be able to build a world that “dances and sings” at a more human pace.

Notes:

• The British Petroleum report separates Central and South America (including Puerto Rico) from North America, which includes Mexico. In this post, I included the first and last within Latin America, though culturally and linguistically this is not exact.
• This post was co-written with Argentinean environmentalist and professor Demian Morassi. Demian has published several articles in sites such as Rebelion, SurYSur and The Crash Oil.