World
Institutional
links
Welcome back on
26 -29 August,
ONS 2008
Bridging
the energy gap
is ONS 2006 theme,
from 22-25 August,
in Stavanger, Norway
Petroleumworld
Business
Partners:
Centre for
Global Energy
Studies
  |
|
Editorial Commentary
Jeremy M. Martin, Roger Tissot:
An analysis on Latin America Energy Security
Energy it has been increasingly noted is a strategic geopolitical tool. Take the Western Hemisphere. Brazil has ethanol and now a massive oil discovery; Venezuela has enormous oil reserves and wants to tackle oil consumption patterns abroad; Canada has its tremendous oil sands; and Mexico hopes to change the energy game from checkers to chess while policymakers in Washington, D.C. adopt their standard Jekyll and Hyde positions. Across the region a paradigm shift is underway. Whether the endgame is increased fissures or enhanced interdependence is up for grabs but suffice to say, this is not your father’s Western Hemisphere.
How each country chooses to move their energy pawns is an important question and one that, as it pertains to energy security in our hemisphere, is not abundantly clear. What is clear, however, is that ethanol and biofuels have become the fashionable topic. While the issue has commandeered headlines since the launching of the U.S.-Brazil initiative in March, the numbers tell another story when viewed in the context of energy security and its transformational impact.
According to the International Energy Agency (IEA), only 7% of world demand for liquid fuels will be met by biofuels by 2030. Add to this the divisiveness of the debate over transportation fuels from agricultural commodities and the sustainability and environmental factors and the topic becomes much less sexy.
Putting aside the popular for the mundane, the entire hemisphere must get serious about how it chooses to address the considerable amounts of money that are required to simply maintain the energy status quo of a regional economy growing at roughly 6% per annum. According to estimates by the United Nations' Economic Commission for Latin America and the Caribbean (ECLAC), the region will require -- between now and 2030 -- investments of around US$1.27 trillion (about US$55 billion a year) in the energy sector.
These staggering numbers beg the question of not just who but how. Insufficient investments -- private and public -- bring into question the sustainability of the recent positive economic results, which have been driven mostly by high commodity prices. Moreover, foreign direct investment (FDI) in Latin America has been consistently below those of Asian industrializing countries and the region has one of the lowest ratios of investment to GDP in the world.
As Canada is acutely aware, it is not only about finding the necessary capital to bring to market huge energy projects, but also how to find balance in the context of the climate change debate across the globe. Despite a lack of consensus, it appears that the issue of greenhouse gas emissions, energy and a country’s development will only grow more intertwined.
In the U.S., competing notions of post-Kyoto and cap and trade mechanisms seem no closer to a compromise today than during the original Kyoto debate. That is not just geopolitics, but domestic political reality. And the reality in the United States, particularly during a presidential election cycle, oftentimes is the least conducive to driving enhanced interdependence.
Take the example and importance of Mexico, the U.S.’s third largest oil supplier with roughly 1.3 million barrels a day. Mexican oil is a critical component for U.S. energy policy and interdependence. Then take a quick look at the immigration debate in the U.S. The debate has in many ways taken on an anti-Mexico slant, particularly when it comes to the 700 mile wall along the border. Add to this boiling stew the fact that Mexico’s oil production is in a steady decline and clearly the difficulties are only beginning. A clear cut example of one of the many difficult, interrelated energy and policy challenges in the hemisphere.
Meanwhile one of the region’s most important energy producing countries, Venezuela, has become a vocal critic of everything from the president of the United States to oil consumption habits. The Venezuelans contend that it is the height of arrogance for an energy security discussion to always point to the suppliers; it is the unsustainable model of U.S. consumption that should be Topic A of any energy security discussion. Yet, as with Mexico, if you add a dash of the hugely subsidized oil at home and an overly petrolized state and national budget you come up with another mystery wrapped in an enigma. And more disregard for regional interdependence on both sides.
Indeed, the notion of a change in games from checkers to chess and thus a change in tactics being brought to bear to confront the issue of energy security may be what is most needed in the short term. Dealing with semantics could be a natural starting point. Changing the vocabulary of the debate and its discussants from one hoping for energy independence to one striving for energy interdependence may seem simplistic, but perhaps necessary.
Let’s face it, energy security in a globalized world – and energy may be the best example we have of globalization – is really about our ability to depend on one another and be interdependent in the most positive sense of the word. Alas, we have a ways to go in this hemisphere.
Jeremy M. Martin is Director, Energy Program of the Institute of the Americas, Roger Tissot is Director, Latin America, Country Strategies Group at PFC Energy. Petroleumworld does not necessarily share these views.
Editor's note: All comments posted and published on Petroleumworld, do not reflect either for or against the opinion expressed in the comment as an endorsement of Petroleumworld. All comments expressed are private comments and do not necessary reflect the view of this website. All comments are posted and published without liability to Petroleumworld.
Fair use Notice: This site contains copyrighted material the use of which has not always been specifically authorized by the copyright owner. We are making such material available in our efforts to advance understanding of issues of environmental and humanitarian significance. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml.
All works published by Petroleumworld are in accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. Petroleumworld has no affiliation whatsoever with the originator of this article nor is Petroleumworld endorsed or sponsored by the originator.
Petroleumworld encourages persons to reproduce, reprint, or broadcast Petroleumworld articles provided that any such reproduction identify the original source, http://www.petroleumworld.com or else and it is done within the fair use as provided for in section 107 of the US Copyright Law. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from the copyright owner.
Internet web links to http://www.petroleumworld.com are appreciated
Petroleumworld welcomes your feedback and comments: editor@petroleumworld.com. By using this link, you agree to allow E&P to publish your comments on our letters page.
Petroleumworld News 01/15/08
Copyright© 2008 Petroleumworld. All rights reserved.
Send this story to a friend
Your feedback is important to us!
Readers' comments: share your thoughts on this article.
We invite all our readers to share with us
their views and comments about this article.Write to editor@petroleumworld.com
Any question or suggestions, please write to:
editor@petroleumworld.comBest Viewed with IE 5.01+
Windows NT 4.0, '95, '98 and ME +/ 800x600 pixels