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49 Energy and Bad Luck in Bolivia Humberto Vacaflor, Siglo 21 55 Oil and the Transformation of the Ecuadorian State Walter Spurrier Baquerizo, Grupo Spurrier 61 Energy, Development, and Regional Integration David Mares, University of California, San Diego 73 Author Biographies Introduction Cynthia J. Arnson and Jessica Varat Latin America as a region does not always come to mind as a major player on the world energy scene. With oil prices worldwide spiraling to unprecedented levels and the war in Iraq showing little sign of abating, the region that holds that dis- tinction—at least in the public imagination in the United States—is the Middle East. As this report indicates, however, Latin American countries and South America in particular possess some of the largest oil and natural gas reserves in the world. And Mexico and Venezuela have been large oil producers for decades. Nonetheless, despite significant energy cooperation among countries of the region, particularly in the area of electrical energy, energy relationships among countries have become increasingly politicized and conflictive. Once important source of that conflict is resurgent resource nationalism. At a time of high commodity prices, the drive by governments and populations to assert greater sovereignty over the resources themselves and extract higher rents from the exploitation of those resources has had far-reaching domestic and regional consequences. While the reciprocal needs of energy producers and importers in Latin America could in theory be a force for greater cooperation and regional integration, in practice core asymmetries and nationalist politics have led to discord and insecurity. Consider the following: • Venezuela currently stands 9th in global oil production. But if untapped reserves in the Orinoco Belt are counted, Venezuelan reserves exceed those of Saudi Arabia.1 Venezuela also possesses the largest natural gas deposits in South America; in the entire Western Hemisphere, Venezuela’s gas reserves are second only to the United States and almost triple those of Canada.2 High oil revenues have underwritten vast increases in social spending by the government of President Hugo Chávez as well as the provision of oil on concessionary terms to neighboring countries, particularly in the Caribbean and Central America. But oil production in Venezuela is declining, due to viiiPDF Image | Energy and Development in South America
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