What’s Happening with Energy Supplies in Latin America?

Erasmo Calzadilla

HAVANA TIMES — A few months ago, a group of us who follow this issue tried to answer the question above, taking advantage of the annual Statistical Review report published by British Petroleum. Our ideas were gathered together and published in an article here and on other digital magazines.

In this year’s edition, we returned, curious to know whether our predictions had come true. The study which I will now summarize – and broaden with further details – appeared on The Oil Crash blog.

As we had foreseen a year ago, the energy scene in Latin America and the Caribbean is becoming more and more complex.

Out of all the energy sources we have, oil is in the most critical situation; because of our extremely high dependence on it, because oil production has been falling at a steady rate for a decade now, and because it can’t be substituted in the short-term for crucial economic activities. A small drop in consumption could set fire to the continent.

Percent of energy by source.
Percent of energy in Latin America by source.  Oil, coal, gas, nuclear, hydroelectric, other renewables, biofuel.

Last year, we predicted that the consumption of this black gold would decrease before 2020. In the best of cases, it would increase until it crossed over with oil production levels and then it would begin to fall. The following graph shows our predictions.

Production and consumption of oil in Latin America.
Production and consumption of oil in Latin America.

We warned, furthermore, that the spike in energy consumption (the sum of all kinds of energy sources) wouldn’t be too far off either. It has been hair-raising to confirm just how accurate we were.

Oil consumption in 2015
Oil consumption in 2015

The immediate cause for these slightly “premature” energy drops has been the economic recession that has taken root in Latin America since two years ago. The recession has affected investments in the energy sector and this vicious cycle has been dragging us down to a point of no return. However, the global cause has been the depletion of capitalism’s expansion model, which can no longer continue to harm and consume the planet’s finite resources in an exponential manner. There will be better and worse times but evil is always lurking in the background and the predictions for industrial civilization are dire.

Another aspect of the problem that needs to be examined is oil refinery. We are becoming more and more dependent on the derivatives of our own crude oil which are manufactured in distant lands, nearly always in the north.

Import and export of oil derivatives.
Import and export of oil derivatives.

In spite of the fact that these are industries which create a lot of pollution, the US has preferred to keep their refineries which process oil – their own as well as that of others – on their own soil. Not by choice, but because refined oil is a powerful control mechanism which will play a decisive role when fossil fuels are in their last days. 31% of the black gold that we extract here in the region is distilled abroad.

Refining our oil.
How much of our oil is refined at home.  Refined in other countries, refined at home, in millions of barrels per day.

Things don’t look very promising for the energy sector in Latin America and the Caribbean. However, the IMF and the BM predict that there will be growth within these parts of the world in 2017. We’re dying of curiosity to see how that will happen.

And I won’t give anything else away so that you’ll want to read the article written by Anibal Hernandez and Demian Morassi, who have been meticulous in giving explanations and details.

 


Erasmo Calzadilla

Erasmo Calzadilla: I find it difficult to introduce myself in public. I've tried many times but it doesn’t flow. I’m more less how I appear in my posts, add some unpresentable qualities and stir; that should do for a first approach. If you want to dig a little deeper, ask me for an appointment and wait for a reply.

3 thoughts on “What’s Happening with Energy Supplies in Latin America?

  • “…oil is in the most critical situation; because of our extremely high dependence on it, because oil production has been falling at a steady rate for a decade now.” Actually this is incorrect. There is actually a glut of oil on the market, thus the call by certain oil producing country’s to cut back production. The real reason for a regional drop in oil production is the increasingly rapid destruction of Venezuela’s oil infrastructure due to the Maduro governments total ineptitude.

  • Your charts are not demonstrative of the whole picture. There has been a world wide oversupply of oil for the past 2 years, not the steady decline your charts show. Saudi Arabia has continued to pump oil out of the ground, keeping prices low. Demand has grown, but not by as much as production. The result has been the dramatic drop in oil prices. Venezuela has the largest oil reserves in the world, but because of 2 decades of incompetent economic management under Chavez/Maduro, the Venezuelan oil industry has all but collapsed, bringing down the overall oil production in Latin America.

    http://www.nasdaq.com/article/us-eia-raises-forecast-to-world-oil-demand-in-2016-and-2017-cm619107

    The good news is, soon the people of Venezuela will be rid of the corrupt socialist regime and sensible economic policies can be implemented. This will turn around the economy, in particular the oil industry, which will help lead South America to economic recovery and development.

  • No shortage of oil, just lack of investment.

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