Planning for Higher Oil Prices : Power Sector Impact in Latin America and the Caribbean

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.

Bibliographic Details

Main Authors:	Yépez-García, Rigoberto Ariel, San Vicente Portes, Luis, García, Luis Enrique
Language:	English en_US
Published:	World Bank, Washington, DC 2013-12
Subjects:	ADVERSE EFFECTS, AMOUNT OF OIL, APPROACH, ATMOSPHERE, AVAILABILITY, BALANCE, BARREL, BARREL OIL, BARREL PRICE, BARRELS PER DAY, BIOMASS, BIOMASS GENERATION, CARBON, CARBON DIOXIDE, CO2, CO2 EMISSIONS, COAL, COAL PRICES, COAL PRICING, COAL RESOURCES, COAL UNITS, CONVENTIONAL GAS, COST OF COAL, COST OF ELECTRICITY, COST OF GAS, CRUDE OIL, CRUDE OIL PRICES, CRUDE OIL SUPPLY, CRUDE PRICE, DEMAND FOR ENERGY, DEMAND FOR OIL, DEMAND GROWTH, DIESEL, DRILLING, ECOSYSTEMS, ELECTRIC POWER, ELECTRIC POWER GENERATORS, ELECTRICITY, ELECTRICITY CONSUMPTION, ELECTRICITY COSTS, ELECTRICITY DEMAND, ELECTRICITY GENERATION, ELECTRICITY GENERATION MIX, ELECTRICITY PRICES, ELECTRICITY PRICING, ELECTRICITY PRODUCTION, ELECTRICITY SECTOR, ELECTRICITY SUPPLY, ELECTRICITY TARIFF, ENERGY BALANCE, ENERGY CONSERVATION, ENERGY CONSUMPTION, ENERGY COSTS, ENERGY DEMAND, ENERGY EFFICIENCY, ENERGY INFORMATION ADMINISTRATION, ENERGY INTENSITY, ENERGY MARKET, ENERGY MIX, ENERGY NEEDS, ENERGY PLANNERS, ENERGY POLICY, ENERGY PRICES, ENERGY REQUIREMENTS, ENERGY SOURCES, ENERGY TECHNOLOGY, ENERGY TECHNOLOGY ASSESSMENT, ENERGY USE, ENVIRONMENTAL IMPACT, ENVIRONMENTAL IMPLICATIONS, EXCESS SUPPLY, EXTRACTION, FEEDSTOCK, FOREIGN EXCHANGE, FOSSIL, FOSSIL FUEL, FOSSIL FUELS, FOSSIL-FUEL, FUEL, FUEL COST, FUEL COSTS, FUEL DEMAND, FUEL EXPORTS, FUEL OIL, FUEL PRICE, FUEL PRICES, FUEL SUBSTITUTION, FUEL USE, FUTURE ENERGY NEEDS, GAS MARKETS, GAS PRICE, GAS PRICES, GAS PRICING, GAS PRODUCER, GAS PRODUCTION, GAS SUPPLY, GAS TECHNOLOGY, GAS TURBINE, GAS WELLHEAD, GAS-PRODUCING COUNTRIES, GASOLINE, GASOLINE PRODUCTION, GENERATION, GENERATION CAPACITY, GEOTHERMAL GENERATION, GREENHOUSE, GREENHOUSE GAS, GREENHOUSE GAS EMISSIONS, GROSS DOMESTIC PRODUCT, GROWTH IN ELECTRICITY DEMAND, HEALTH RISKS, HEAVY CRUDE, HEAVY FUEL OIL, HEAVY RELIANCE, HIGH OIL PRICES, HIGHER ENERGY CONSUMPTION, HIGHER ENERGY PRICES, HIGHER OIL PRICES, HYDROCARBON FUELS, HYDROCARBONS, HYDROPOWER, HYDROPOWER GENERATION, INCOME, INTERNATIONAL ENERGY AGENCY, INVESTMENTS IN ENERGY, KILOWATT HOUR, LIGHT CRUDE, LIQUID FUEL, LIQUIDS PRODUCTION, LNG, METHANE, MILLION BARRELS, MILLION BARRELS PER DAY, MUNICIPAL SOLID WASTE, NATURAL GAS, NATURAL GAS MARKET, NATURAL GAS PRICE, NATURAL GAS PRICES, NATURAL RESOURCES, NATURAL-GAS, NET OIL, OIL, OIL AND GAS, OIL CONSUMPTION, OIL CRISIS, OIL DEMAND, OIL EQUIVALENT, OIL EXPORTER, OIL EXPORTERS, OIL EXPORTING, OIL EXPORTING COUNTRIES, OIL EXPORTS, OIL IMPORT, OIL IMPORT BILL, OIL IMPORTERS, OIL IMPORTING, OIL IMPORTING COUNTRIES, OIL IMPORTING NATIONS, OIL MARKET, OIL POWER, OIL PRICE, OIL PRICE CHANGES, OIL PRICE FLUCTUATIONS, OIL PRICE SCENARIO, OIL PRICES, OIL PRODUCTS, OIL REFINERY, OIL REVENUES, OIL SHOCK, OIL SHOCKS, OIL SUPPLIES, OIL SUPPLY, OIL TANKER, OIL-IMPORTING COUNTRIES, OIL-PRODUCING COUNTRIES, OPEC, OPEC COUNTRIES, PEAK LOAD, PER CAPITA ENERGY, PER CAPITA ENERGY CONSUMPTION, PETROLEUM, PETROLEUM EXPORTING COUNTRIES, PIPELINES, POTENT GREENHOUSE GAS, POWER, POWER GENERATION, POWER PRODUCER, POWER PRODUCERS, POWER SECTOR, PRICE COMPARISONS, PRICE COMPETITIVENESS, PRICE ELASTICITY, PRICE OF COAL, PRICE OF GAS, PRICE OF NATURAL GAS, PRICE OF OIL, PRICE VOLATILITY, PRICES OF ENERGY, PRIMARY ENERGY, PRIMARY ENERGY SOURCE, PRIVATE SECTOR, PRODUCTION COSTS, REFINED PRODUCTS, REFINERIES, REFINERY CAPACITY, REGRESSION ANALYSIS, RENEWABLE ENERGY, RENEWABLE ENERGY POTENTIAL, RENEWABLE ENERGY RESOURCES, RENEWABLE SOURCES, RENEWABLE TECHNOLOGIES, RESIDUAL FUEL, RESIDUAL FUEL OIL, SPOT PRICE, SULFUR, SULFUR CONTENT, SUSTAINABLE DEVELOPMENT, SUSTAINABLE ENERGY, THERMAL UNIT, TOTAL ELECTRICITY GENERATION, TOTAL ELECTRICITY PRODUCTION, TOTAL ENERGY CONSUMPTION, UTILITIES, WELLHEAD PRICE, WELLHEAD PRICES, WIND, WIND ENERGY, WIND ENERGY GENERATION, WORLD OIL, WORLD OIL PRODUCTION,
Online Access:	http://documents.worldbank.org/curated/en/2013/12/19128477/planning-higher-oil-prices-power-sector-impact-latin-america-caribbean https://hdl.handle.net/10986/17547
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