NCPA - National Center for Policy Analysis


January 28, 2009

As the United States seeks to get its economy going by building roads, bridges and bicycle paths, Brazil has decided to create jobs and move toward energy independence by investing in its energy infrastructure and the liquid gold that lies just off its pristine beaches, says Investor's Business Daily (IBD).

For example:

  • Brazil's state-owned energy giant, Petrobras, announced on Friday that it plans to spend $174.4 billion on developing its huge recent offshore oil finds through 2013.
  • A $28.6 billion spending plan for this year will be financed in part on loans from Brazil's state development bank.

"This is not a rescue," Petrobras CEO Jose Sergio Gabrielli told reporters in Rio de Janeiro.  "This is very different than what is happening in other countries.  This is not a bailout."

Indeed, it's an investment that fosters energy independence, keeps Brazil's energy dollars at home and creates jobs, says IBD.

"The volumes of investments will have an important macroeconomic impact in Brazil," said Gabrielli.

Such investments could have a similar beneficial impact on the American economy, and the irony is that the oil companies are willing to use their own money here if we let them.  Yet, even more restrictions on U.S. domestic production are planned, says IBD:

  • Thanks in part to a relentless pursuit of domestic energy resources to complement its ethanol production, the Brazilian economy grew 5.8 percent in 2008 and is projected to expand 2.9 percent even in a tough 2009, according to the median estimate of 16 economists surveyed by Bloomberg.
  • If Brazil had copied our current energy policy, it wouldn't have discovered in November 2007 the Tupi field or in April 2008 the Carioca field in the deep-water Santos Basin off Brazil's southeastern coast.
  • Tupi is estimated to contain 5 billion to 8 billon barrels of crude, and Carioca may hold up to 33 billion -- the third-largest oil field ever discovered and big enough to supply every refinery in the United States for six years.

These discoveries and others around the world show that oil has not peaked, and new technologies continue to expand reserves beyond the level of consumption.  Other countries recognize the economic importance of domestic energy resources.  We are in fact the only industrial country to put our reserves off-limits, says IBD.

Source: Editorial, "Drill Like Brazil," Investor's Business Journal, January 27, 2009.


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