Contrasting Latin American approaches to the oil crisis

The collapse in global oil prices over the last year has kept Colombian governmental officials working overtime. Most of Colombia’s exports come from oil, and the government depends on oil revenues to fund a large part of its spending. As a result, the government’s response to and management of the country’s oil crisis has dominated Colombian business headlines in recent months.

This week, Bloomberg published an analysis piece contrasting the currency regimes in three South American oil economies: Colombia, Ecuador, and Venezuela. In Bloomberg’s analysis, Colombia has vastly outperformed its neighbors, through its policy of a free-floating peso that has fallen in value in line with global oil prices.

Nonetheless, this policy hurt Colombia’s economic growth during the oil boom times, when the Colombian peso appreciated too much. Today, though, it has allowed the country’s economy to absorb the impact of the oil crisis and register healthy economic growth for 2015.

In other oil-related news, Colombian state oil company Ecopetrol and Occidental Petroleum announced that they would invest up to $2 billion over the course of 10 years in order to boost production at the jointly-operated La Cira-Infantes oil field. According to an Ecopetrol press release, the investment will boost oil product at La Cira by more than 200 million barrels over the next 10 years.