Thread: Is Oil South of the Border the Underlying Reason?

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New World Order
By INVESTOR'S BUSINESS DAILY | Posted Friday, April 25, 2008 4:20 PM PT
Geopolitics: With the discovery of vast troves of oil south of our border, it's probable that U.S. strategic interests will shift to our hemisphere. For the Middle East, that's a warning. For the Americas, it's an opportunity.

Read More: Energy | Latin America & Caribbean

By 2020, the places that matter to the U.S. strategically may be entirely different than today. It's not hard to project the possibilities.

Oil is being discovered in vast quantities in Brazil. Other gigantic deposits have been located in Mexico, Colombia and Peru. Colombia now shows oil reserves as high as Algeria's. The U.S. imported 4.9 million barrels of oil a day in 2007. Absent development of U.S. reserves, the U.S. will need the new suppliers.

The picture is still emerging, and it's possible some of these discoveries might not pan out.

But taken as a whole, the newly discovered oil and natural gas in Latin America could compare with the energy of the Middle East, according to Stratfor's Peter Zeihan, who recently spoke to Bloomberg. Already five of the top 15 oil-producing nations exist in the Western Hemisphere.
With it, the focus of U.S. overseas interests will shift. Idealism aside, the fact that U.S. policy interests trail oil isn't really a secret.

High oil prices and tight supply create incentives to seek out new sources. Enter Brazil, Colombia and Peru, none of which were big players a few years ago. New technology to extract oil and natural gas from previously impossible sea depths or siphon it from laced rock formations brings those countries to the fore.

But the most pivotal factor in why oil's future is south is that most of these new players have the political will to drill, something not seen in oil-producing nations dominated by green sensibilities, as the U.S. is, or by petrotyrants in Venezuela, Russia and Iran.

Colombia is now our ninth-largest oil supplier, and Brazil is our 11th largest. Both have moved sharply higher in the ranks of suppliers in the last few years. In 2007, Colombia supplied 50 million barrels of oil a day and Brazil supplied 61 million — small numbers compared with our biggest supplier, Canada, which sold the U.S. 680 million barrels a day last year. But the trend is up — and with the new discoveries, probably sharply so.
For Latin states, this stands a chance of being welcome. The region has long felt neglected by the U.S., and the reward of greater integration is more American-style freedom and prosperity. That trend has been going on for some years in Latin America, with only a few exceptions.
There's a lot of action already taking place, much of it in the private sector, which seems to possess a collective wisdom about the way the wind is blowing.

Combined foreign investment in Brazil and Mexico, at $74 billion in 2007, already tops that of China. Yet the two countries have a population less than half of China's size. This is a sign that investors think the long-term future is south, not east, as the media hypes it.

Most U.S. corporations already have big Latin American operations among their foreign offices, suggesting a sense that important markets are developing down south. In this regard, they differ from the U.S. government, whose strategic resources are focused in the Middle East.
That may change. As Latin American nations pump more oil, the U.S.' focus on the Mideast will wane. That may be healthy for us, but not so much for the nondemocratic regimes of that region.

True enough, we're on the verge of some major diplomatic realignments. The U.S. will share the blessings of its liberty, technology and advancements with its nearer neighbors, and get oil and new markets in return. Not a bad deal.

I want to know why we have to depend on them at all. If it weren't for the invironmentalists we could drill on our own soil and off shore. We haven't built a refinery in 30 years.