17.906 The Geopolitics and Geoeconomics of Global Energy, Spring 2007 Prof. Flynt Leverett Discussion 11: The Interconnection of Energy Policy in the Western Hemisphere Western Hemisphere • Really important for energy security for the US • Top 3 exporters to US o Canada o Mexico o Venezuela Canada • Oil from Tar Sands o Makes sense economically when prices are really high • What are the implications for politics based on the oil distribution in Canada? o Power has historically been in the east, but as the oil and gas are in the west, there has been a large push by people in the west for more regionalization/decentralization of the government so that all of their money is not going east • Canada is the ideal supplier for the United States o Safe transportation o Stable government o Close Mexico • First to nationalize (late 1930s) o As a result, the majors really cracked down on them • Become a larger player in the 1970s when the US became worried about supply diversity as a response to high prices, and thus turned back to Mexico for oil • Pemex o Not a happy story o Corruption o Inefficiency o Production capacity problems o Government interference  Used as a political tool for most of it’s history o Hard for Pemex to invest into the future because the government has historically taken all of the revenue generated to invest into other things  As a result, infrastructure has not been maintained, and various other problems have arisen Venezuela • 50/50 deal with private oil companies in the 1940s • Nationalization in the 1970s • Hugo Chavez comes to power in 1998 o Latin American populism, and anti-imperial sentiment, and pseudo-nationalism o Uses oil sector as a political tool to help out constituents and gain influence in the international playing filed • Recent news o Venezuela is probably going to be nationalizing all of its up- and down-stream oil production Cite as: Paul Staniland, course materials for 17.906 Reading Seminar in Social Science: The Geopolitics andGeoeconomics of Global Energy, Spring 2007. MIT OpenCourseWare (http://ocw.mit.edu), MassachusettsInstitute of Technology. Downloaded on [DD Month YYYY].• How much oil does Venezuela have? o Substantial holdings o Potentially the second largest holdings of oil in the world • Other countries that have also been involved with Venezuela o Bolivia  Recent election to a leftist leader o Ecuador o Iran o Russia o China o India Brazil • Petrobras o National oil company o Better business process o Less government interaction/involvement • International ties o China o India o United States o Nigeria (kind of) Growing role of Latin America in US energy policy • Good o Closer o Relatively stable • Bad o China’s growing influence o US’s sphere of influence could decline if oil companies get stronger • What has the economic trajectory for Latin America been recently o Lots of currency issues in the region o Have been very insularly until the late 1970s, which falls apart in the mid 1980s o Neo-liberalism  Less protectionist trade policies  Privatization o Now, there seems to be a backlash against neo-liberalism in Latin America o Oil is very much bound to the national discussions on the respective economies Cite as: Paul Staniland, course materials for 17.906 Reading Seminar in Social Science: The Geopolitics andGeoeconomics of Global Energy, Spring 2007. MIT OpenCourseWare (http://ocw.mit.edu), MassachusettsInstitute of Technology. Downloaded on [DD Month YYYY].17.906 The Geopolitics and Geoeconomics of Global Energy Discussion 11 Prof. Flynt Leverett Page