Venezuela and Colombia, where I’ve spent the last few weeks, are heavily reliant on oil. Both nations have developed economies that are so dependent on oil that the recent drop in crude prices has caused significant panic among the populace.
Of course, crises often lead to opportunities, so it would seem logical to invest in renewable energy to stimulate the local economy and prepare for future cycles. It should be a perfect time to construct wind farms and micro-hydro projects or install solar panels on reservoirs. However, that’s not what is taking place.
In Venezuela, the government is proudly announcing the revival of mature oil wells. While the country endures its worst financial crisis since at least the 1990s, the administration continues to distribute gasoline for free to anyone who will take it. Yes, free. Young investors are now pouring their cash into oil as well. The team behind Derwick Associates, led by Alejandro Betancourt, has invested approximately $250 million in shares of the Bogota-based oil company Pacific E & P (formerly Pacific Rubiales). Additionally, their associate Francisco D’Agostino is part of a group investing over $30 million into Harvest Natural Resources, a Texas oil firm. The betting is firmly on oil.
In Colombia, I listened to Finance Minister Mauricio Cárdenas speak at an oil conference. He informed the audience of his country’s commitment to maintain oil production at 1 million barrels per day or more, irrespective of falling oil prices. “That’s why it’s crucial for the hydrocarbons sector to receive all the support and incentives so that it can invest, explore, and ultimately increase production, especially in this low-price environment. This is vital for the national economy and essential for the country’s public finances.” (Link to the story about his speech here, although the quote is taken from my recording.)
On the same day he spoke, August 26, a report was released:
The effects of global sea level rise could be far more alarming than the worst-case scenarios projected by current climate models, which do not entirely reflect the rapid disintegration of ice sheets and glaciers, NASA scientists revealed today (Aug. 26) during a press briefing.
Moreover, sea levels are already rising. NASA scientists emphasize that the key question is how quickly the oceans will rise in the coming years.
Here we have two tropical, coastal nations facing the degradation of coral reefs and atolls, along with lost glaciers and unique alpine moors known as páramos. Both countries rely on a stable hydrological cycle for their energy needs and basic survival. Yet, their response to the crisis in the oil sector is to continue investing in oil.
Humanity! Never change.