The rise and fall of Colombia's oil boom town

The Associated Press put out a lengthy piece on Wednesday reporting on the impact that the collapse in global oil prices will have on Colombia’s oil boomtowns. Puerto Gaitan, in the Colombian llanos, is technically the country’s richest city, thanks to the revenues pumped into the small rural town by its booming oil industry. According to the report, now that oil prices have come plummeting back to earth, the town’s 45,000 residents are either tightening their belts or preparing to leave the area altogether. The story of Puerto Gaitan is all too familiar, as the flood of money was spent on lavish construction projects and extravagant forms of entertainment. Mayor Edgar Humberto Silva tried to put a silver lining on the crisis, “In the long run this could be a good thing because oil has made us all idiots.” He hopes to stimulate the areas ecotourism industry. We wish him good luck.

La Republica published an article that took a step back and compared the historical trajectories of the Peruvian and Colombian oil industries. In 1982, Peru actually exported oil to Colombia, but since then, the oil sectors in the two countries have taken very different paths. The article attributes this difference in fortunes to policy decisions: Colombian state oil company Ecopetrol accounts for 70% of Colombia’s oil production, whereas Peruvian state oil company Perupetro does not produce a single barrel. This article serves as a reminder that though future growth will not be easy for Colombia’s oil sector, things could be much worse.

In mining-related news, the Colombian edition of La Republica published a report ranking Latin American countries on their attractiveness for mining investment. Colombia came in a very disappointing fifth in the region. Luis Ernesto Mejía, the ex Colombian Minister of Mining and Energy, explained that the Colombian mining sector is going through a rough time. Local communities greet mining companies with hostility, and the Colombian government provides very little policy or security support. Though the government is working to get better, Mejía said that it has a long way to go before it catches up with global leader Chile.