Friday, September 30, 2016

Colombia's Oil Addiction

Articles in El Tiempo call for more investment in
petroleum production.
Colombia is not often seen as a petroleum state like its neighbors Ecuador and Venezuela. Yet, until oil prices tanked, Colombia earned more than half of its foreign exchange income from petroleum exports. And oil provided a big chunk of government royalties - money that Colombia is desperate for to pay the costs of the peace deal to be voted on Nov. 2.

However, oil has brought big environmental costs, and produced relatively few jobs.

Now that petroleum's price dive has demonstrated the danger of relying on commodity exports, Colombia's response is simple: Double down on oil.

EcoPetrol's headquarters building in
Bogotá. The company's mascot
is an iguana.
El Tiempo has run a series of stories emphasizing the need to boost oil production with subsidies and tax breaks, neglecting to mention that these subsidies also benefit some of the nation's wealthiest men and corporations.

Nor is the newspaper or the government bothered by the contradiction between their dire warnings about the effects of oil-driven climate change and promises that Colombia will do its part, and the nation's oily ambitions.

I read recently that Colombia has only 7 years of petroleum reserves at the rate that it's pumping them out. Undoubtedly, they can extend those with more prospecting, but in the end it's probably a losing race.

There's also a vicious cycle (another type of tragedy of the commons) involved in the race to pump
An electric tax. Bogotá has exactly 43 of them on the streets,
according to El Tiempo.
(Photo: Ministry of the Environment)
more oil, which many other producers are also engaged in. The more oil producers pump to compensate for low prices, the lower prices will drop, making production gains valueless.

Colombia should instead direct subsidies toward manufacturing, which employs lots of people and is more sustainable in the long run. (And would produce employment for ex-guerrillas who may not want to become poor farmers.) It should also make real efforts to shift toward more efficient and oil-free energy in transportation and industry.

By Mike Ceaser, of Bogotá Bike Tours

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