evaluating possible changes to the Alberta fields. An additional prob- are encouraged to buy SUVs.
tax and licensing framework for the lem, particularly for the green-con- President Obama’s green energy
pre-salt region. Proposals tabled in- scious Obama administration, is the agenda can also find a receptive
cluderaisingtaxes androyalties and high environmental cost. The pro- audience in the hemisphere. Alter-switching to production-sharing cess of separation emits more than native energy sources across the re-agreements, a framework that allows twice the CO2 of conventional pe- gion could offer important relief to
the government to reap more of the troleum-extraction operations over consumers in Latin America, and
benefits of higher oil prices. Some the life cycle of these projects, and provide additional export income.
officials are also clamoring to close environmentalists also charge that Sugarcane-based ethanol production
the pre-salt reserves to private com- oil-sands production pollutes wa- in Brazil is already a major source
panies altogether, a proposal that ter supplies. of alternative fuel. Colombia, Peru
would hinder Brazil from realizing and many Central American coun-the potential of its oil wealth. tries are building similar programs.
U.S. Petro-Diplomacy But the potential for increasing ex-
Canada Focuses on Tar Much of the hemisphere’s resource ports of biofuels to the United States
Canada has banked much of its en- nationalism was a reaction to the is hampered by high tariffs that pro-ergy policy on exploiting northern perceived failure of the neo-lib- tect U.S. agricultural producers.
Alberta’s tar sands, whose estimated eral policies urged by Washington The economic crisis that has rip-reserves of 174 billion barrels of oil during the 1990s. But a more coop- pled through the hemisphere may
represent the biggest global resource erative approach by the Obama ad- in fact help to push things for ward.
identified so far outside the Middle ministration—mixing incentives The plunge in oil prices is already
East. Canadians have been actively to private U.S. companies with eco- causing serious budget constraints
promoting the tar sands’ increased nomic cooperation—could help re- for the governments of Venezuela
potential to the newadministration verse the trend. and Ecuador. Mexico avoided trou-in Washington, and energy was one Private capital and expertise from ble this year by hedging most of its
of the main agenda topics during major international oil companies 2009 exports, but it will be vulnera-
President Obama’s visit to Otta wa hold the key to exploiting Latin Amer- ble in 2010. Governments that were
in February. ica’s huge resources and to allowing emboldened by high oil prices to
So far, oil-sands production is rela- countries to boost export dollars. tighten investment terms may now
tively small. About 1 million b/d were Lo wer oil prices and the financial be forced to offer concessions to oil
produced in 2007, but Canada’s Na- meltdown could, in fact, present a companies, and to introduce reforms
tional Energy Board predicted in late window of opportunity for U. S. en- to boost output, since higher prices
2007 that production would nearly ergy relations with the region. can no longer compensate for declin-triple to 2. 8 million b/d by 2015. While several countries could dra- ing production. The most important
That would significantly raise the matically increase output to boost lesson for Washington policymakers
As Latin America’s population mushrooms and its economies develop,
it is becoming one of the fastest-growing regions for oil demand.
hemisphere’s profile in energy sup- exports, they must also rein in the arising from today’s economic tur-plies. But developing the tar sands is growth in their own consumption. moil may be that, on the road to en-technically challenging—and costly. As Latin America’s population mush- ergy independence, strengthening
Oil companies must first separate the rooms and its economies develop, it is the hemisphere’s energy interdepen-tar-like bitumen trapped in the sands becoming one of the fastest growing dence is a crucial first step.
to upgrade it to crude. To break even regions for oil demand. Government
on the huge investments (involving fuel subsidies have exacerbated the
a consortium of U.S. and Canadian problem. Mexico’s government spent Lisa Viscidi is Latin America Team
companies), oil prices need to sta- around $20 billion last year to main- Leader for Energy Intelligence Group.
bilize at $80 a barrel. The recent de- tain fuel prices below market rates, She overseas coverage of the oil and
cline in prices, however, has forced a and with gasoline costing only 20 gas industry in Latin America for
delay or downsizing in many of the cents per gallon, Venezuelan drivers EIG’s daily and weekly publications.