What Happened To Latin America’s Oil in 2015?

Erasmo Calzadilla

HAVANA TIMES — The 2016 first International Energy Agency (IEA) oil market report has just been made public.

Last year, we reviewed the data supplied by British Petroleum and shared our concerns here. Oil production in Latin America has been falling in linear and stable fashion for more than a decade. The problem is a serious one for several reasons:

• It is the most heavily consumed energy resource (accounting for nearly 50 % of the total)
• It is one of the main sources of export revenues
• Its consumption increases proportionately to the population and “progress.”
• In many areas and sectors, oil cannot be substituted with other sources of energy

Using data from British Petroleum and a spreadsheet, we can trace different tendencies and conclude that, unless significant changes are made, oil consumption and production in Latin America will cross and begin to drop in tandem at the close of this decade.

An event of this nature could mark the end of progress and development in the region, in the modern and Western sense of these terms. Will it actually happen? In the long run, there’s no doubt about it, but, in the short term, we may be seeing surprises that prolong the agony or bring about the worst of scenarios. What do recent reports have to say about this?

In 2014, we saw a recovery led by Brazil. Many got their hopes up. Last year, however, we got back on the downward road.

To common sense, sustained by the disinterested help of the press, the drop in oil production is owed to the collapse of prices and the resulting market adjustments. In Venezuela’s particular case, it is chalked up to the inept and corrupt intervention of the Bolivarian government.

But no, one need only take a look at the graphs to understand that the industry’s twilight began well before the drop in prices and that, in Venezuela, began before the Chavez government.

To date, production has been decreasing in stable fashion, at a pace that is almost immune to the different financial storms (which is to be expected, as oil is a non-renewable, essential resource that’s exploited in a continuous manner). The dramatic decrease in the number of active rigs, stemming from the current crisis, could however plunge us into a much steeper decline or prompt an irreversible collapse.

We can draw one conclusion from all this: at this crucial juncture, we are deciding the course of history but are not aware of this. If we managed to grasp what’s coming, we could prepare to attenuate the impact and rescue the best of civilization. If we continue to act in alienated fashion, we are doomed to utter collapse.

By Demian Morassi and Erasmo Calzadilla.