Greece, Puerto Rico, and Cyprus have been in the news because of their deep financial problems. But actuary Gail Tverberg sees something else the three countries have in common: they’re all heavily dependent on oil.
In 2006, not long before the 2008 price crash, Cyprus relied on oil for all its energy, Puerto Rico counted on it for 98.6% of energy consumption, and Greece was in the 65-70% range. “The percentages are bit lower now, but the relationship is very similar,” Tverberg writes. “Why would high oil consumption as a percentage of total energy be a problem for countries? The issue, as I see it, is competitiveness (or lack thereof) in the world marketplace.”
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Over-reliance on oil wouldn’t have been a problem between 1985 and 2000, when prices below $40 per barrel were comparable with other energy sources. But it’s a different story with oil at $60, much less $100 or more per barrel.
High energy prices “can occur for any number of reasons,” she writes, and they’re a problem for any growing economy. “While countries with a large share of oil in their energy mix tend to fare poorly, at least some countries with a preponderance of cheap energy fuels in their energy mix have tended to do very well,” she notes. “For example, China’s economy has grown rapidly in recent years. In 2006, its share of oil in its energy mix was only 23.0%.”
