In this present installment, I would like to outline some concerns about the impacts that the high prices and even shortages of the unpopular and beloved hydrocarbons, which have been accelerated by the conflict in Europe, are causing at a global and regional level.
This reflection is addressed above all to those radical environmentalists often called denialists. Mainly led by European NGO’s and their followers, to the millions of young people (youtubers and tiktokeros) and also to the indigenous peoples (like the one in Ecuador, for example). These three groups have four things in common.
First, they are fiercely opposed to the continued exploration and exploitation of hydrocarbons on the planet, and demand that this action be immediate. Second, and at the same time, with shameless cynicism, we observe that they are all equally bewitched by all the pleasures of modern life. That is, to travel and transport, to have a car at hand, to be well heated where it is cold, well cooled and air-conditioned where it is hot, to have their food available and fresh (vegetables included) every day and much more. You, my reader friends, understand me.
Third, and with even more cynicism, they demand at the same time that the prices of the food they consume, of the energy they need to transport, heat, cool and live comfortably (as they love to do) do not rise in price. Fourth, they also demand better paid jobs and better incomes. This, without GDP growth and therefore not accompanied by a firm and low-cost energy supply, is not possible.
Not “my son” as they would say in Colombia. This does not add up anywhere. Personally, I do not understand them for this double standard that they are wearing and that can lead the planet to where they themselves do not aspire.
Russia’s invasion of Ukraine has made evident something that was already coming and that is that the energy transition desired by many cannot be accompanied by an immediate halt to hydrocarbon exploration and exploitation activities.
It is important to understand that it is not possible to have a modern life as we all wish without having hydrocarbons available in a timely manner in the markets. And we will have this reality for at least three to five more decades as science and technology advance. And it is not that I am against existing alternative energies (water, solar, wind). On the contrary, I appreciate and value them very much, but I am a realist and pragmatist. Their problem is that they are intermittent and that intermittency makes them unavailable and still very expensive to meet a growing demand for energy, firm at lower cost, compared to the alternative we have with hydrocarbons that are intended to eliminate ipso facto, making them more expensive. No way Josei.
If necessary and timely investments in exploration and exploitation of hydrocarbons are not allowed or are stopped, we will have even higher prices of the hated and venerated diesel, gasoline, jet fuel, LPG and natural gas and also why not shortages as we are observing today.
The lower oil production, disruption of heavy oil deliveries, coupled with the scarce refining capacity in the world, is driving hydrocarbons to very high prices, mainly diesel oil, all over the world. Some countries are experiencing shortages. Protests and strikes everywhere due to inflation, protests and strikes of transporters in several countries due to high fuel prices, emptying of fiscal coffers in those countries that subsidize (read Argentina, Ecuador, Venezuela and Bolivia in our region) and even shortages.
The planet demands energy and for now that energy is called hydrocarbons. The fight against the so-called climate change should be taken by the horns, replacing, as soon as possible, the dirty coal with natural gas and some renewables. Let us remember that Latin America has fairly clean energy (water and natural gas) and pollutes per capita much less than Europe, Asia or the United States, which still use huge amounts of coal and have high standards of living. It is their duty to replace natural gas with coal.
Finally, we should understand that the long-awaited energy transition cannot be massively undertaken without huge investments in mining exploration and exploitation, which will be required to manufacture trillions of storage batteries (cellular, vehicle and backup), trillions of solar panels, millions of wind towers and add all the copper and other minerals needed to expand the power grids to build an electric and hydrocarbon-free planet. Just one more point, my reader friends, to carry out all this enormous mining movement, its transportation and manufacturing, you know that we will need to produce hydrocarbons, mainly diesel and natural gas. Let us make no mistake.
*Alvaro Rios was Minister of Hydrocarbons in Bolivia and is currently a partner of Gas Energy Latin America.