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Erasmo Calzadilla: I find it difficult to introduce myself in public. I’ve tried many times but it doesn’t flow. I’m more less how I appear in my posts, add some unpresentable qualities and stir; that should do for a first approach. If you want to dig a little deeper, ask me for an appointment and wait for a reply.

BBC Report on Cuba’s Energy Crisis Flawed

July 23, 2016 |

Erasmo Calzadilla

Illustration by Carlos

HAVANA TIMES — BBC Mundo (in Spanish) consulted many experts in the field of energy in order to understand how Venezuela’s crisis will affect the Cuban economy. In my opinion, this article only succeeds in confusing its readers rather than clearing things up; the first doubt I had when I read it is:

Has there or hasn’t there been a major and last minute cut in oil exports from Venezuela to Cuba?

Jorge Piñon is an analyst at the Center for International Energy and Environmental Policy (The University of Texas); his team monitors the number of tankers that carry oil from Venezuela to Cuba. Supplies have fallen in recent years from 110,000 to 85,000 barrels per day, however, he states that there HAS NOT been any change to this in recent months.

The recent adjustments made by the Cuban government therefore do not relate to a last minute cut in their oil supply, he concludes. It could be a precautionary measure or a problem that’s come about because of the increase in energy consumption due to the tourist boom the country is currently experiencing.

However, Raul Castro has publicly stated that “in spite of Maduro’s efforts” oil exports to Cuba HAVE been reduced and he confirmed these words by taking emergency action immediately. Even the Cienfuegos oil refinery, the most modern refinery in the country, was “temporarily” closed.

According to a report from the US Energy Information Administration which backs up the argument that oil exports HAVE been cut, daily exports from Venezuela to Cuba were around 50,000 barrels in 2014 – almost half of the figure reported by the analyst- and fell even more at the beginning of 2015. These statistics coincide with those given by Carmelo Mesa Lago. Who do we believe?

Shipments of oil from Venezuela to the Caribbean.

Our wine is bitter and our oil is heavy

Now let’s take a look at another facet of this issue. According to Pinon, Cuba consumes about 140,000 barrels of oil per day; out of these, 50,000 (38% of the total) barrels are extracted from Cuban soil. If Venezuela ceases to export oil to Cuba, we will have a deficit of 90,000 barrels per day, the expert estimates.

However, this calculation is far from being precise. Pinon forgot to mention that Cuban oil, because it’s very heavy and contaminated, can only be used as an energy carrier. In the Special Period, we apparently tried and as far as I know it was a great disaster.

In order to use Cuban oil for what we need it for, we need to refine it with equipment that we just don’t have here in Cuba, and if we were able to manage it, the energy surplus is meager [1]. On the Office for National Statistics website, we can see that what we imported as a primary energy source (4.976 Mt) is very similar to what we consume today (5.145 Mt). Only 3% of the mix comes from Cuba [2].

Cuba: oil consumption as a primary energy carrier

That is to say, the situation is much worse than what the analyst thought it would be because we can’t rely on our acid tar when things get ugly. If Venezuela stops sending us crude oil, the energy deficit will be almost 100%. In a case like this, gas “made in Cuba” will have to take on the burden. It currently supplies 14% of our electrical energy.

Cuba: Electricity generation by source. Oil, gas, hydroelectric, other renewables.

Protected by tourism?

An optimist, J. Pinon assures us that tourism is our “safety net against another Special Period.” For this reason, as well as for the aforementioned, he deduces that Cuba is better prepared for a drastic cut in our oil supply now than it was in the ‘90s. Let’s examine the facts:

  • It’s obvious that the cutback will also affect tourism. It hasn’t even started yet and airports are already suffering long and bothersome power outages.
  • That the energy crisis is far from being a Caribbean problem and sooner rather than later, it will affect the main countries sending us their tourism.

With regard to the second idea: “Cuba is better prepared,” I believe that the situation is a lot more complicated now than it was two decades ago, for the following reasons:

  • After a quarter of a century of oil extraction, today we find lower quality oil in our subsoil.
  • The Environment has deteriorated and changed, and our fertile lands that once calmed our hunger two decades ago, will yield a lot less today.
  • The socio-cultural situation we have now in Cuba is a lot worse than it was back then, due to our “utopian” downfall that once used to keep us together, united.

Something more than oil

The BBC article focuses explicitly on oil, however the root causes of this crisis go deeper. Thanks to the agreements made with Venezuela, Cuba’s revenue is approximately an annual 9 billion dollars, a total that doubles the exports revenue of the country. If Venezuela “fails us”, we won’t only be lacking oil; we’ll be lacking capital as well which we’ll need to buy oil on the international market. Are we getting ready for such a likely storm?

Conclusions

A lot has been written about Cuba’s current energy and economic crisis. There are more than enough scaremongering articles that enjoy depicting chaos that doesn’t really exist; others – like the one we’ve been looking at – transmit an unfounded optimism.

Concrete conclusions that I’ve managed to deduce from this analysis are:

  • In the last few months there HAS been an important cut in our oil supply from Venezuela.
  • Out of the 50,000 barrels of black gold that are extracted on a daily basis here in Cuba (1/3 of our consumption), most of them are NOT in conditions to be used as an energy carrier, and won’t be the cushion that breaks our fall.
  • Tourism will help while it lasts, but it will also be affected by the crisis.
  • Generally speaking, I do NOT think we are better prepared now to take on a new Special Period.

Most of the articles that I’ve been able to analyze about the energy crisis in Cuba overlook the underlying geological energy root of this problem, and it’s very strange that they try to link this micro phenomenon with civilization’s crisis of capitalism. We could say the same thing about them that we say here about official journalists: they yank the chain but they leave the monkey alone.
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Notes:

  1. The Energy Return on Investment rate of heavy oil is almost 3. A TRE = 10 is the minimum that complex societies (like our own) need to keep running. http://crashoil.blogspot.com/2015/08/venezuela-hacia-la-bancarrota.html; https://es.wikipedia.org/wiki/Tasa_de_retorno_energ%C3%A9tico.
  2. Last updated in 2012.
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  • Griffin

    A good analysis of the current energy situation in Cuba. There is one detail missing: the Cuban government used to take a portion of the Venezuelan oil shipped to Cuba and then resold it to other customers in the Caribbean basin. Not all the oil shipped to Cuba was used in Cuba.

    When oil prices were high, this was a convenience revenue source. Now that oil prices have crashed, and appear to be heading lower, the resale of Venezuelan oil is much less profitable.

    As a result, in addition to the growing energy crisis, the revenue stream is lost, too.