Mitigating Vulnerability to High and Volatile Oil Prices
Power Sector Experience in Latin America and the Caribbean
- English
- PDF
- Available on iOS & Android
Mitigating Vulnerability to High and Volatile Oil Prices
Power Sector Experience in Latin America and the Caribbean
About this book
Countries heavily dependent on imported oil to power a significant portion of their electricity generation are especially vulnerable to high and volatile oil prices. In net oil-importing countries worldwide, high and volatile oil prices ripple through the power sector to numerous segments of the economy. As prices move up and down, so does the cost of electricity production, which has far-reaching effects on the economy, fiscal and trade balances, businesses, and household living standards. High and volatile oil prices affect economies at both a macro and micro level. The major direct effects at the macro level are a deteriorating trade balance, through a higher import bill, reflecting a worsening in terms of trade; and a weakening fiscal balance due to greater government transfers and subsidies to insulate movements in international energy markets. At the micro level, investment uncertainty results from the higher risk of engaging in new projects and associated development and sunk costs, which, in turn, affects policy decisions and economic growth. This study responds to the needs of policy makers and energy planners in oil-importing countries to better manage exposure to oil price risk. The study's objective is threefold. First, it analyzes the economic effects of higher and volatile prices on oil-importing countries, with emphasis on the power sector, using examples from Latin America and the Caribbean (LAC). Second, it proposes a menu of complementary options that can be applied over multiple time frames. Several structural measures are designed to reduce oil generation and consumption, while a range of financial instruments are suggested for managing price risk in the short term. Finally, it attempts to quantify some of the macroeconomic and microeconomic benefits that could accrue from implementing such options.
Frequently asked questions
- Essential is ideal for learners and professionals who enjoy exploring a wide range of subjects. Access the Essential Library with 800,000+ trusted titles and best-sellers across business, personal growth, and the humanities. Includes unlimited reading time and Standard Read Aloud voice.
- Complete: Perfect for advanced learners and researchers needing full, unrestricted access. Unlock 1.4M+ books across hundreds of subjects, including academic and specialized titles. The Complete Plan also includes advanced features like Premium Read Aloud and Research Assistant.
Please note we cannot support devices running on iOS 13 and Android 7 or earlier. Learn more about using the app.
Information
Table of contents
- Contents
- Foreword
- Acknowledgments
- Abbreviations
- Units of Measure
- Executive Summary
- Chapter 1 Introduction
- Chapter 2 Economic Effects of High and Volatile Oil Prices
- Chapter 3 Economic Indicators of Vulnerability: Analysis of Latin America and the Caribbean
- Chapter 4 Managing Oil Price Dynamics in the Power Sector: Experience in Latin America and the Caribbean
- Chapter 5 Price Risk Management Instruments
- Chapter 6 Diversifying from Oil-Fired Power Generation
- Chapter 7 Investing in Energy Efficiency
- Chapter 8 Regional Energy Integration
- Chapter 9 How Much Can It Help?
- Chapter 10 Conclusions
- Appendix A Country Development Indicators
- Appendix B World Bank Advisory Services: Managing Oil Price Exposure and Implementing Risk Management Strategies
- Appendix C Accounting for Fuel Price Risk in Power System Planning: Case Studies in the Dominican Republic and Honduras
- Bibliography
- Boxes
- Figures
- Map
- Tables