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Latin American economies have benefitted from relatively strong economic growth over the past several years growing their middle class and leading to an increase in fuel demand. However, a lack of refineries in the region to produce oil products domestically has created the need to boost imports from the US.
According to Bloomberg, in 2013 traders booked for tankers to send a total 19 million tonnes of fuel from the US to ports around Latin America, a 5.4 percent increase from the year before. This figure is expected to increase again this year as demand continues to rise, and refining capacity is expected to stay the same.
Economic growth in Latin America did slow last year, but it still manages to outpace the rest of the world. The World Bank reports that the constant economic expansion has helped to lift over 50 million people out of poverty, meaning that the middle class now out numbers the poor for the first time ever.
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Bloomberg calculates that Latin American economies will expand a combine 2.9 percent in 2014, up from 2.38 percent in 2013, and 2.85 percent in 2012. At the same time the world economy is expected to grow by 2.87 percent this year, up from 2.03 percent in 2013.
Rodrigo Favela, the executive director for refining, planning, and evaluation at Hart Energy, stated that “demand in Latin America will keep expanding this year amid a growing middle class. I wouldn’t be surprised to see another year of record imports.”
Over the past five year Latin American refiners, such as Petroleos de Venezuela and Petroleo Brasileiro, have doubled their volumes of US imports.
In 2013 Latin America’s top 12 economies took about a third of all US petroleum product exports. Brazil, Mexico, Argentina, Venezuela, Chile, Colombia, Ecuador, Peru, Honduras, Guatemala, Costa Rica, and the Dominican Republic imported a total 1.36 million barrels a day, more than double the 657,000 barrels a day imported in 2008.
By. Joao Peixe of Oilprice.com
Joao is a writer for Oilprice.com