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SIDS

Managing Oil Price Volatility: Bringing Latin America’s Lessons to the Pacific

Nicholas Keyes's picture

Pacific IslandsIt is well understood that climate change poses specific dangers for small island developing states. Less commented on is another threat: the vulnerability of these states to the repercussions of energy insecurity.  

Pacific islands are some of the most vulnerable.  Spread out over a huge expanse of ocean, pooling power among countries is not the option that it is for other regions.  Lacking fossil fuel resources, many of these states are forced to import oil products over long distances.  When prices spike, these countries are among the hardest hit.  

Global oil prices have now been volatile for ten years, compared with historical trends, with sharp volatility characterizing the markets since late 2007.  During this period, the World Bank has been engaged with developing countries to help them manage and mitigate this volatility so that it does not hamper the development or extension of energy services to poor communities.

Small Island States Set Ambitious Energy Agenda for Rio+20

Vivien Foster's picture

Photo Credit: Wikimedia Commons, Lee Siebert (Smithsonian Institution) Freshwater Lake (L'Etang) lies in the moat between Micotrin lava dome and the eastern wall of the Wotten Waven caldera, partially visible in the background. The 7 x 4.5 x wide caldera is elongated in an SW-NE direction, and it extends on the SW to near the capital city of Roseau. The two coalesced lava domes of Micotrin straddle the NE rim of the caldera. Strong geothermal activity persists in the caldera, the most prominent of which lies near the village of Wotten Waven along the River Blanc and contains numerous bubbling pools and fumaroles.The Small Island Developing States, or SIDS, include 52 countries spanning the Caribbean, Atlantic, Indian and Pacific Oceans, as well as the South China and Mediterranean Seas. They range from low-income countries such as Haiti to high-income countries like Barbados and Singapore.

Despite their diversity, many of them have a challenge and irony in common.  Being small, often remotely-located,  and usually without domestic fossil fuel reserves, these countries rely on imported fossil fuels for their energy, and bear the brunt of high and volatile  oil prices.  The irony is that many of these same islands have abundant renewable energy resources, including wind, solar, hydro and geothermal. And many are at sea-level, vulnerable to sea-level rise provoked by climate change, and highly-sensitized to the urgency of making a transition to a greener economy—a transition that would reduce their exposure to petroleum price shocks and hikes.