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Low Oil Prices And China Pull The Rug From Under Latin America
Low Oil Prices And China Pull The Rug From Under Latin America
When China sneezes, the world gets a cold.
The world’s second largest economy is suddenly looking unstable, with economic growth slowing, the stock markets gyrating, and a surprise currency devaluation having taken worldwide markets by surprise. That could be bad news not just for China, but for a lot of countries that depend on exporting to China.
China’s phenomenal growth over the past two decades led to boom times for other countries as well. China is a voracious consumer of all sorts of commodities – oil, gas, coal, copper, iron ore, agricultural products, and more. For countries exporting these goods, the run up in commodity prices since the middle of the last decade has been extraordinary.
Nowhere is that more true than in Latin America. Countries like Brazil, Argentina, Chile, Peru, and Colombia have enjoyed strong economic growth rates because of China’s rapid expansion.
Related: Germany Struggles With Too Much Renewable Energy
But the boom times are over. Latin America is getting hit with a double whammy: the collapse in commodity prices and the sudden economic turmoil in China.
Low oil prices are hurting Latin America’s exporters. Mexico’s state-owned oil company Pemex has already slashed its budget for the year, cutting spending from $27.3 billion to $23.5 billion. Pemex has also borne the brunt of government spending cutbacks. And the much-anticipated first auction of Mexico’s offshore oil resources following a historic liberalization of its energy sector produceddisappointing results, as low oil prices scared away bidders.
Brazil has fared worse. Compounded by a colossal corruption scandal, Brazil’s Petrobras is drowning in debt as oil prices have plummeted. In late June, Petrobras announced it would slash spending by one-third, divest itself of billions of dollars in assets, and it lowered its long-term oil production target to just 2.8 million barrels per day (mb/d) by 2020, down from a previous target of 4 mb/d.
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Canadian Oil Surge to U.S. Gulf Puts Mexico on Defensive – Bloomberg
Canadian Oil Surge to U.S. Gulf Puts Mexico on Defensive – Bloomberg.
A price war is brewing between Canadaand Latin America over who will satisfy U.S. Gulf Coast refiners’ hunger for heavy oil.
The new Seaway Twin pipeline will almost double the amount of heavy Canadian crude coming to Gulf terminals and plants to about 400,000 barrels a day starting in January, according to Calgary-based ARC Financial Corp. The shipments are growing even without the Keystone XL pipeline, which has been delayed for six years because of environmental opposition.
The Canadian supply will square off against crudes from Mexico and Venezuela that have traditionally fed refineries along the Texas and Louisiana coasts. State-owned Petroleos Mexicanos widened its discount for U.S. buyers in December by the most since August 2013. Valero Energy Corp. and Marathon Petroleum Corp., which invested in special equipment to refine heavy crude, stand to gain the most from the Canadian supply.
Latin America Moves Towards Decarbonising the Economy — Global Issues
Latin America Moves Towards Decarbonising the Economy — Global Issues.
RIO DE JANEIRO, Nov 14 (IPS) – When the advances made towards curbing global warming are analysed in the first 12 days of December in Lima, during the 20th climate conference, Latin America will present some achievements, as well as the many challenges it faces in “decarbonising development”.
A debate on decarbonising development has emerged in Latin America, a region where natural resources, including fossil fuels, play a heavy role in the economy. Credit: Courtesy of Guilherme/Flickr
Experts consulted by IPS said that during the 20th session of the Conference of the Parties (COP20) to the United Nations Framework Convention on Climate Change (UNFCCC) the region will be able to point to progress in reducing deforestation in the Amazon jungle, especially in the Brazilian portion where forest loss was reduced 80 percent in the last decade, according to official sources.
But they say Latin America’s focus should be the “decarbonisation” of the economy, limiting the share of fossil fuels and other sources of carbon dioxide (CO2) in the energy mix, in order to mitigate the impact of climate change, as demanded by the Intergovernmental Panel on Climate Change (IPCC) in its fifth report, launched Nov. 2.
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