In Latin America politics and energy cannot easily be separated. Oil and gas production are mostly in state hands and in some countries the earnings of energy companies even finance the state budget. Governments also use energy as a lever of foreign policy, and domestic nationalist discourse on energy has an important symbolic-integrative function. Energy wealth in Latin America has so far contributed little to overcoming poverty and underdevelopment. The sometimes considerable oil and gas earnings are not used to improve general welfare but skimmed off by the elite.

Energy utilization is unevenly distributed in Latin America. For example, 46 million people in the hinterland have no access to electricity. In recent years, there have been efforts to create a decentralized supply system. Another problem is that energy reserves are also unevenly distributed. Central America has meager deposits, and several other states are net importers. Various projects (including some very large ones, such as the Venezuelan project for an 8 000 kilometer gas pipeline) are aimed at linking consumers internationally. In addition, there are various refinery and power station projects in respect of which the choice of location was made with a view to the cost advantages for several countries. The integration of the continent in the energy sector is making progress and will improve energy supply and lower costs. Ideally, a Latin American energy market could emerge. Geostrategic rivalry and manifest political conflicts between individual states, however, restrict the creation of a continental energy system established primarily on the basis of economic considerations.

Alongside oil and gas Latin America has further options which should be considered in the future energy mix. Renewable resources constitute considerable unexhausted potential. There are ecological objections to more intensive use of water power. The indications are that nuclear power states Argentina, Brazil, and Mexico wish to intensify their utilization of nuclear power. On the other hand, new opportunities are being offered to Latin America by the trade in CO2 emissions. European countries and firms wish to acquire CO2 credits. Climate policy could change the character of trade relations between Europe and Latin America and become a political and technological clamp between the two continents.