A scenario with higher oil prices hasimportant implications for diverting from oil-basedtechnologies to renewables, as well as gas, coal, andnuclear alternatives. By 2030, energy demand in LatinAmerica and the Caribbean (LAC) is expected to double from2008 levels. A key issue is deciding on the most appropriatemix of fuels for power generation, given the various pricesof energy sources and technologies, as well as availabilityof renewable energy. The study's broad aim is toevaluate the impact of higher oil prices on the cost ofgenerating electricity in countries of the LAC region sothat better-informed energy policy planners can bufferfuture adverse effects. The study defines high oil prices asthose above United States (U.S.) $100 per barrel. This priceis considered a reasonable starting point for discussiongiven the recent range in oil prices, which averaged $95 abarrel in 2011. A price of $150 per barrel is defined asconsiderably high yet plausible given historical and currentprice levels, available forecasts, and other potential pricedrivers. The study's specific objectives are to: (i)analyze the economic effects of higher oil prices on LACcountries, particularly oil importers; (ii) assess theshort-term impact on electricity generation costs based onthe composition of generation matrices across countries ofthe region; and (iii) quantify the long term impact onelectricity costs if countries modify the composition oftheir generation matrices in response to higher oil prices.This report is organized as follows: chapter one givesintroduction. Chapter two presents the framework foranalyzing the impact of higher oil prices, including anoverview of recent price trends, major drivers of oil andgas prices, and a medium-term scenario under which higherprices might occur. Chapter three analyzes the impact ofhigher oil prices on LAC countries. Chapter four focuses onthe short-term impact of higher oil prices on theelectricity sector and the potential impact on the cost ofgeneration, depending on the planning decisions made forfuture electricity generation. Finally, chapter five offerspolicy makers recommendations on the relevance ofconsidering the potential impact of higher oil prices oncountries' fiscal and trade balances, the cost ofelectricity to final consumers, and the impact that suchcost may have on the competitiveness of their productive sector.
PDF
download
878987797
028-85220240
