By Carlos A. Quiroga
The response of the Government of Bolivia to the sharp fall in oil prices is defiantly: unprecedented investments to rise and industrialize the production of natural gas, its main source of foreign exchange, and to export electricity.
Amid the overwhelming pressure of oversupply, which threatens to put the price of crude oil below $ 40 a barrel, that is little more than a quarter of its record, Vice President Alvaro Garcia said Wednesday it may be a good opportunity for Bolivia.
Garcia told a meeting of businessmen that the government of Evo Morales has decided to respond to the crisis with a plan to enhance the «energy locomotive».
These investments will reach 30,000 million dollars in the decade 2015-2025. «We will not go back, we have not defined, nor will define a single cent reduction in that investment, we will keep the energy locomotive under the leadership of the State», the Vice President promised.
Oil futures dropped toward $40 a barrel on Wednesday, the lowest level since March 2009, to settle with a loss of more than 4% after a U.S. government reported an unexpected weekly climb in crude-oil inventories.
“The structural oversupply in crude oil remains the key concern for the market,” Taki Tsaklanos, head of research at Secular Investor, said in an analysis quoted by Reuters.
“Crude oil has critical support near $40,” he said. “A drop below that level is certainly in the cards, and that would not bode well for the remainder of the year.”
Oil has more than halved in value over the last year, and many oil companies, particularly in the United States, say they may soon have to rein in production, tightening supply, unless the market recovers.
Most of analysts say oil prices will stay low for years to come.