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With renewable energy sources in countries like Brazil and Bolivia, will U.S. energy policy shift toward South America?

Question submitted by Fagner Dantas, from Universidade Federal da Bahia, March 20, 2013

Answered by: Blake Clayton, Adjunct Fellow for Energy

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The global energy map is being redrawn at an accelerated pace. All signs point to the United States becoming part of an increasingly hemispheric energy trade, both for oil as well as for biofuels like ethanol. The Middle East will still loom large in U.S. energy policy given its crucial role in the world oil market, but U.S. energy officials and companies are forging deeper ties with their counterparts elsewhere in the Americas.

Oil and gas production in North America is booming, and the prospect of significantly higher oil production in countries like Brazil and Mexico is real. At the same time, a persistent decline in oil consumption in the United States has contributed to the country becoming a major net exporter of petroleum products, much of which flows to Latin America. Meanwhile crude oil imports from Canada along with indigenous U.S. production are decreasing imports to the United States from other parts of the world, including from the Middle East and West Africa.

On the biofuels side, ethanol from Brazilian sugarcane, which the U.S. Environmental Protection Agency classifies as an "advanced" biofuel, has made inroads into U.S. markets. According to a Wall Street Journal report, roughly 90 percent of advanced biofuels counted toward U.S. quotas in 2012 were imported, mostly from Brazil. Indeed, U.S. biofuel policy toward Latin America will remain a topic of debate in Washington, particularly related to Brazilian imports, given the competitive threat they pose to U.S. corn ethanol producers.