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Energy prices in Latin America - Statistics & Facts

In the first months of 2020, crude oil prices plummeted worldwide, following the onset of the COVID-19 pandemic. With transport and industrial activity brought close to a halt, an unparalleled drop in demand was registered across the globe. Latin America — home to some of the largest global oil-producing countries — also felt its impact. Additionally, the situation caused ripples in the prices of conventional liquid fuels, such as gasoline, and raised once more the conversation on the competitiveness of renewable energy.

Another global oil crisis

Although severe oscillations in oil prices are no novelty, the drop in prices caused by the COVID-19 pandemic reached unprecedented levels, with WTI prices reaching a negative value for the first time in history. In Latin America, the effects were also registered. Venezuela, one of the founding members of OPEC, saw the price of its reference Merey blend reach as low as seven U.S. dollars per barrel in April 2020, a year-on-year drop of 88 percent. Mexico, who had already been struggling with a continual drop in crude oil production, experienced similar results. Although prices began to slowly increase since May, a full recovery seems far on the horizon.

Gasoline prices and the Latin American consumer

As a product of crude oil refining, gasoline prices are largely dependent on the price of this fossil fuel. Not surprisingly, in the first half of 2020, gasoline prices dropped in most Latin American countries, a consequence of the collapse in international oil prices. However, a country’s dependence on oil imports, as well as government policies, also play a major role in fuel prices in the region. For example, Venezuela had for decades the cheapest gasoline in the world, a result of state subsidies that had the fuel commercialized at symbolic prices. Nevertheless, low prices don’t always translate to a high gasoline purchasing power in Latin America. Even with governmental subsidies, the average Venezuelan salary could afford less than 150 liters of gasoline per month in 2020, one of the lowest figures in the region.

Looking towards a more sustainable energy future

The coronavirus pandemic has once again put on display the instability of crude oil prices, and the challenges of relying on fossil fuels as a main energy source. On the other hand, low prices increase the competitiveness of fossil fuels in comparison to renewable energy sources. Nevertheless, renewable energy has become considerably more competitive in the past decade. The price of onshore wind power in Latin America dropped by nearly 50 percent since 2010. In Brazil, the cost of solar electricity has nearly halved in just four years. With governments struggling to reach climate change mitigation targets, the development of renewable energy prices might play a key role in the Latin American (and global) energy future.

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Energy prices in Latin America

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