Latin American car ownership rising steadily
Subsidies and economic growth mean fuel consumption and car ownership will rise steadily
In Brazil's financial capital Sao Paolo the roads have become so clogged with cars that those who can afford it now take to the sky. Executives and officials ride helicopters from rooftop to rooftop for meetings and lunches to avoid the crippling gridlock below.
Sao Paolo's problem is extreme, but traffic-choked highways are a familiar sight in cities across Latin America. As strong economic growth over the past decade has improved the fortunes for many in the region, demand for cars, trucks and buses -“ and the fuel to keep them moving - has soared. The trend is likely to continue. Across Latin America, vehicle ownership rose by more than 40% from 2000 to 2010, from 107 to 150.4 vehicles per 1,000 people. Only East Asia's booming economies saw faster growth over the period. Between 1990 and 2010, fuel demand for the transport sector doubled from 1.4 million barrels a day (b/d) to 2.8m b/d, according to the International Energy Agency (IEA). The rapid rise has come in spite of surging international oil prices. This is because all of Latin America's major economies, in one way or another, shield drivers from the pain of higher prices at the pump. Opec-member Venezuela, where petrol is cheaper than water, is the poster child for fuel subsidies. While high oil prices have seen drivers in Europe and the US turn to smaller, more fuel-efficient cars, gas-guzzling SUVs still rule the road in Caracas.
Governments are paying an increasingly steep price for those subsidies, which are draining funds from budgets that could be spent on cash-starved education, health and welfare systems. Venezuela's spending on fuel subsidies rose from $10.4 billion in 2009 to nearly $22bn in 2011, around 7.5% of the country's GDP, according to the IEA. In Mexico, the cost of fuel subsidies has increased five-fold from $3.17bn in 2009 to $15.9bn in 2011. Argentina's subsidy bill has tripled over the period from around $500m to $1.7bn.
comments powered by Disqus.