Mitigating vulnerability to higth and Volatile Oil Prices. Power Sector Experience in Latin America and the Caribbean

Yépez-Garcia, Rigoberto
Dana, Julie

2012

BV No.207

This report is organized as follows. Chapter 2 differentiates the general effects and dynamics of high versus volatile oil prices in oil-importing countries and factors that determine how stakeholder groups are affected. Chapter 3 applies several economic indicators to determine a country's high oil dependence and thus vulnerability to high and volatile oil prices, using the LAC region as the focus of the analysis. Chapter 4 examines this vulnerability in the context of the region's power sector, including the market structure, utility ownership, and pricing policies. Chapter 5 details the price risk management (hedging) instruments that could be applied to manage oil price volatility over the shorter term. It offers a general overview of the benefits and drawbacks associated with the various instruments, and goes a step further by reviewing the process for assessing a country's commodity risk profile and making general recommendations about how to establish the institutional framework for commodity risk management. The report's focus then shifts to the several longer-term structural measures to manage high and volatile oil prices by reducing oil consumption. These are diversification from oil in the energy generation mix, discussed in chapter 6; the role of energy efficiency in reducing electricity consumption, presented in chapter 7; and the relevance of regional energy integration to diversify energy sources, covered in chapter 8. Chapter 9 then attempts to quantify the potential benefits of these structural mitigation measures in terms of avoided oil consumption. Finally, chapter 10 offers concluding perspectives

HIDROCARBUROS; PRECIOS; INDICADORES ECONOMICOS; ENERGIA ELECTRICA;