Publication: Planning for Higher Oil Prices : Power Sector Impact in Latin America and the Caribbean
Date
2013-12
ISSN
Published
2013-12
Author(s)
Yépez-García, Rigoberto Ariel
San Vicente Portes, Luis
García, Luis Enrique
Abstract
A scenario with higher oil prices has
important implications for diverting from oil-based
technologies to renewables, as well as gas, coal, and
nuclear alternatives. By 2030, energy demand in Latin
America and the Caribbean (LAC) is expected to double from
2008 levels. A key issue is deciding on the most appropriate
mix of fuels for power generation, given the various prices
of energy sources and technologies, as well as availability
of renewable energy. The study's broad aim is to
evaluate the impact of higher oil prices on the cost of
generating electricity in countries of the LAC region so
that better-informed energy policy planners can buffer
future adverse effects. The study defines high oil prices as
those above United States (U.S.) $100 per barrel. This price
is considered a reasonable starting point for discussion
given the recent range in oil prices, which averaged $95 a
barrel in 2011. A price of $150 per barrel is defined as
considerably high yet plausible given historical and current
price levels, available forecasts, and other potential price
drivers. The study's specific objectives are to: (i)
analyze the economic effects of higher oil prices on LAC
countries, particularly oil importers; (ii) assess the
short-term impact on electricity generation costs based on
the composition of generation matrices across countries of
the region; and (iii) quantify the long term impact on
electricity costs if countries modify the composition of
their generation matrices in response to higher oil prices.
This report is organized as follows: chapter one gives
introduction. Chapter two presents the framework for
analyzing the impact of higher oil prices, including an
overview of recent price trends, major drivers of oil and
gas prices, and a medium-term scenario under which higher
prices might occur. Chapter three analyzes the impact of
higher oil prices on LAC countries. Chapter four focuses on
the short-term impact of higher oil prices on the
electricity sector and the potential impact on the cost of
generation, depending on the planning decisions made for
future electricity generation. Finally, chapter five offers
policy makers recommendations on the relevance of
considering the potential impact of higher oil prices on
countries' fiscal and trade balances, the cost of
electricity to final consumers, and the impact that such
cost may have on the competitiveness of their productive sector.
Citation
“Yépez-García, Rigoberto Ariel; San Vicente Portes, Luis; García, Luis Enrique. 2013. Planning for Higher Oil Prices : Power Sector Impact in Latin America and the Caribbean. © World Bank, Washington, DC. http://hdl.handle.net/10986/17547 License: CC BY 3.0 IGO.”