The recent decline in oil prices has been devastating to the government coffers of some of Latin America’s oil-dependent countries, including Venezuela, Colombia and Ecuador. But seldom mentioned is that lower prices may also have an upside for the region’s biggest exporters, as high-cost producers in competing Canada take a hit.
Over the past decade, many of the world’s most expensive oil fields were developed for the first time thanks to a sustained period of high prices. For years, the US boom was enabled by $100 crude that allowed producers to employ costly drilling techniques to extract oil from shale. Indeed, it is widely agreed that the surge in production of light oil from shale formations in the United States was a key driver in the eventual oil price collapse. The US crude benchmark West Texas Intermediate (WTI) has declined by more than half since June to around $45 per barrel.