The nation of Brazil is facing a massive shortage of electricity, and Americans would do well to pay attention so as not to repeat the tragic blunder.
Brazil’s residents may have to live with crippling blackouts and electricity rationing because a drought has literally dried up the hydroelectric reservoirs that supply two-thirds of Brazil’s power.
This is the same nation that is hosting the World Cup and will host the Summer Olympics in 2014.
“Rationing or not, the drought’s impact on Brazil will be large,” Jose Rosenblatt, an energy industry consultant, told Reuters. “There’s no way to avoid it.”
The electricity shortages are already having a severe impact on Brazil’s economy and the lifestyles of its people. The country is facing a rate of inflation at 6 percent and the rate likely will rise because Standard & Poor’s (S&P) just lowered Brazil’s credit rating. That means it’ll cost more for the government to borrow money, which could lead to higher inflation.
The country’s rate of economic growth also could be harmed. During a similar drought in 2001 and 2002, Brazil’s rate of economic growth fell under 1 percent. Some experts are warning that industries might have to shut down because of electricity shortages – which of course would result in job losses.
Brazil has the world’s seventh largest economy.
20 Percent Increases in Electric Bills
The biggest impact Brazilians will see is in their electric bills, which could rise by as much as 20 percent, Reuters predicted.
Utility bills will increase because Brazil will need to spend at least $5.2 billion to build more power plants. The government has already had to bail out utility operators once and may have to do so again.
President Dilma Rousseff, who is facing reelection in October, is blaming the weather for electricity shortages. Yet not everybody in Brazil is so sure, some observers blame the government.
“Rain is a factor, but not the only one,” said Joao Carlos Mello, president of Sao Paulo energy consultancy Thymos Energia. “It’s also failed policies and poor management.”
In February, reservoirs in the country’s leading agricultural and industrial regions were only 35 percent full – nearly a record — compared with a 66 percent capacity the past 15 years for the same month.
Americans should pay close attention to what is going on in Brazil because it could happen here. California is already facing electricity shortages because of a mega-drought that is limiting utilities’ ability to produce hydroelectricity. Only the use of solar power has prevented blackouts in the Golden State.
Story continues below video, which was recorded in January
Data gathered by the US Bureau of Labor Statistics indicates that electricity prices rose twice as fast as costs for other kinds of energy in January. Additionally, data from the United States Energy Information Agency (EIA) indicates that electricity production the United States has been declining steadily since 2007.
US Senator James Inhofe (R-Oklahoma) believes that new regulations imposed by the EPA could lead to the shutdown of coal-burning plants – a situation he thinks will lead to electricity shortages and blackouts. Nearly 40 percent of America’s electric power comes from coal.
EIA Data compiled by the Nerdgraph website indicates that electricity prices in the United States are expected to increase by 21 percent in the next 10 years and 51 percent in the next 30 years.
Fortunately there is a way for Americans and Canadians to avoid the blackouts, sky high bills and electricity shortages that Brazilians are facing. Families and businesses need to consider generating their own electricity in the form of solar panels or other alternative energy.