The Red Cross

The Red Cross

in 

Ecuador

The above images known throughout the world as a sign of help in a disaster.

In Ecuador the Red Cross provide just that and more.

Blood banks are run by them.

Clinics with doctors, dentists, are run by them.

Medical laboratories are run by them.

In the larger cities they provide run or support the 911 service, with ambulances and paramedics.

So what has gone wrong?

This year so far 4 Clinics run by the Red Cross have been robbed by armed men.

These clinics are run under the protection of the Red Cross, which means no arms are allowed on their sites.

These clinics provide a service to the community they are in, when this happens it reflects on the community.

Some time ago I reported that the crime rate was down, if this is an indication of the level of crime, then I would say that we are getting close to the bottom.

When people are taking advantage of a community service run by doctors, nurses, technicians and volunteers are held up at gunpoint.

The most recent attack took place in Santa Elena, which involved a doctor, dentist, technician and patients

As far as I know none of the losses have been recovered.

Ecuador’s Oil Industry Catastrophe… To Spread Around The World

Ecuador’s Oil Industry Catastrophe… To Spread Around The World

There’s an ongoing catastrophe taking place in Ecuador.  Not only has a significant part of the Amazon been polluted by toxic waste oil left behind from the wonderful folks at Texaco when the company started drilling for oil in Ecuador back in the 1970’s, but the low oil price has totally gutted the oil industry.

There’s an ongoing catastrophe taking place in Ecuador.  Not only has a significant part of the Amazon been polluted by toxic waste oil left behind from the wonderful folks at Texaco when the company started drilling for oil in Ecuador back in the 1970’s, but the low oil price has totally gutted the oil industry.

This is a big problem for Ecuador because 50% of its exports and 30% of its government revenues come from oil (source).  According to the article, Ecuador Reveals Pain Inside OPEC: It’s Pumping Oil At A Loss:

President Rafael Correa said on Tuesday that the South American nation is receiving as little as $30 a barrel for its crude, while production costs average about $39.  The warning comes after several other members of the Organization of Petroleum Exporting Countries, including Algeria and Libya, said the group should consider holding an emergency meeting to respond to the drop in oil prices.

Ecuador was receiving as little as $30 a barrel back in August 2015 when that article was written.  However, today its likely getting a price closer to $20 for a barrel of oil.  If Ecuador was in serious trouble last year due to low oil prices, the situation today is nothing short of a catastrophe for it’s oil industry and economy.

Even though Ecuador isn’t a large producer of oil, it produced a little more than 556,000 barrels a day (bd) in 2014, while total consumption was 259,000 bd.  Thus, it exported nearly 300,000 bd in 2014.  Here is a chart of Ecuador’s net oil exports since the 1970’s:

What is interesting in the chart above, is the increase in Ecuador’s domestic oil consumption.  Even though overall production increased significantly since the 1970’s, so has consumption (black line).  Ecuador’s total production increased from 200,000 bd in the 1970’s, to 556,000 bd, however net exports (green) did not increase all that much due rising domestic consumption.

The Collapse Of Ecuador’s Drilling Rig Industry

While the drilling rig count in the U.S. and world has fallen considerably over the past 18 months, nothing can compare to the collapse that has taken place in Ecuador.  When oil was trading over $100 in August 2014, Ecuador had 27 drilling rigs working in the country.   Today… they have one:

Thus, the low price of oil has totally gutted Ecuador’s drilling rig industry…. a 96% collapse in just 18 months.  Again, the reason for the huge decline in Ecuador’s drilling rig industry has to do with simple economics–you can’t continue producing something as a loss, especially at a huge loss.

According to the article, Ecuador: A Nation Of Oil No Longer:

In 1972, the military Government of General Guillermo Rodríguez Lara instigated a mini oil boom. In Quito, his regime exhibited the first barrel of oil produced by a consortium between transnational Texaco and the fledgling Ecuadoran State Petroleum Corporation (CEPE for its Spanish acronym). Nearly half a century later, the Government of Rafael Correa Delgado ends the extractive cycle, squeezing the last drops of black gold from the earth. The depletion of Ecuador’s crude reserves, combined with the collapse in oil prices, spells economic tragedy for a country that has tied its fate to hydrocarbons.

…. In 2015, at an average price of $50 per barrel, the situation is catastrophic. The country expects to make $9.942 billion from oil exports and derivatives, but production and import costs of $10.145 billion leave a shortfall of $226 million.

Unfortunately, for Ecuador, it’s now receiving a price closer to $20 a barrel.  This is the reason the county only has one lousy drilling rig.  And that was based Baker Hughes International rig count as of Jan.

While Ecuador’s oil troubles are worse than other oil exporting countries, due to shortsighted government energy policies, I believe it will be blueprint that will spread throughout the world.  Why?  Because, I don’t believe oil prices will recover for quite some time.  Matter-a-fact, I think we are going to see the price of oil to reach the $20’s before a bottom is made.

Zerohedge published this article today: BP’s Stunning Warning: “Every Oil Storage Tank Will Be Full In A Few Months”:

On Wednesday, BP CEO Robert Dudley – who earlier this month reported the worst annual loss in company history – is out warning that storage tanks will be completely full by the end of H1. “We are very bearish for the first half of the year,” Dudley said at the IP Week conference in London Wednesday. “In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in,” he added. “The market will start balancing in the second half of this year.”

Maybe. Or maybe excess supply will simply be dumped on the market once all the “swimming pools” are full.

If that happens, don’t be surprised to see crude crash into the teens as attempts to clear and dump excess inventory spread like wildfire across the market.

BP suffered the worst annual loss in the company’s history.  So, it’s not just the lousy shale oil companies that are losing money, now its the MAJOR’s.  For example, Chevron made $14.8 billion in cash from operations in the first three quarters of 2015, but spent $22 billion on capital expenditures and paid $6 billion in dividends.  Thus, Chevron paid out $13.2 billion more than it made from operations.

Furthermore, ConnocoPhillips only made $5.9 billion in cash from operations (Q1-Q3 2015), but spent $8 billion on capital expenditures and paid out $2.7 billion in dividends.  Which means, ConnocoPhillips spent $4.8 billion more than it received from operating cash.

The largest U.S. oil company did a little better than Chevron and ConnocoPhillips, but not by much.  ExxonMobil received $25.9 billion in cash from operations (Q1-Q3 2015), but spent $20.3 billion on capital expenditures and paid out $9.1 billion in dividends.  Unfortunately,ExxonMobil also paid out more than it made in operating cash… to the tune of $3.5 billion.

This means, if the price of oil continues to remain low (highly likely), watch for the top three U.S. Major Oil Companies to start slashing dividends.  Investors still holding onto these energy stocks… YOU HAVE BEEN WARNED.

ChevronTexico Dumped 18 Billion Gallons Of Toxic Oil Waste In Ecuador

From the article, A slippery decision: Chevron oil pollution in Ecuador:

Canada’s Supreme Court ruled Friday (04.09.2015) that Ecuadorian villagers can seek to enforce a judgment in Canada for $9.5 billion (8.5 billion euros) against United States oil company Chevron Corporation on a legal case over pollution in the Amazon rainforest.

The Ecuador Supreme Court had ruled in 2012 that Chevron owes this amount as compensation for dumping more than 18 billion gallons (68 billion liters) of oil and toxic waste in the Ecuadorian Amazonia region, where the company operated for 25 years.

While Chevron didn’t drill oil in Ecuador when the oil pollution took place, Texaco did.  When Chevron acquired Texaco in 2000, it inherited the mess it left behind in Ecuador.  According to several sources, it’s the worst case of oil pollution on the planet, 30 times more than the Exxon Valdez oil spill in Alaska.

Lastly, I believe the disaster taking place in Ecuador’s oil industry and economy will spread throughout the rest of the world.  There is just too much debt in the world and with the low oil price, it is gutting economies everywhere.

Ecuador hit with first Zika virus cases

Ecuador hit with first Zika virus cases

QUITO, Ecuador—Ecuador said Friday it has detected its first two cases of the Zika virus, a mosquito-borne disease similar to dengue fever that has been linked to birth defects.

Ecuadoran officials had previously detected four people who arrived from other countries with the disease, which is spreading through Latin America and the Caribbean.

READ: Haiti reports its first cases of mosquito-borne Zika virus

But this is the first time it has been transmitted on Ecuadoran soil, said Veronica Espinosa, deputy cabinet minister responsible for monitoring outbreaks.

“We have now detected, confirmed by laboratory tests, the first two native cases. That is, we now have cases of the virus being transmitted by mosquito bites that happened in Ecuadoran territory,” she told a press conference.

Health Minister Margarita Guevara said the two patients were a 23-year-old woman infected in the northwest and a 15-year-old boy infected in the southwest.

READ: El Salvador issues alert against illness-bearing mosquitoes

She said they were in stable condition.

Zika can cause fever, rash, joint pain and conjunctivitis, with symptoms usually lasting less than a week.

But in pregnant women, the virus can spread to the fetus and cause brain shrinkage or death.

Images of El Nino

Images of El Nino 

Ecuador Coast

The El Niño phenomenon of 2015-2016 is expected to be rival that of 1997-1998, which caused losses equal to 14.5 percent of Ecaudor’s GDP. El Niño causes a weakening of the trade winds, allowing heat to accumulate. The phenomenon shifts global weather, causing flooding in some areas and droughts in others.

Ecuador and Peru are the countries that are most directly affected by El Niño. If predictions are correct, the months ahead could cause debilitating floods, outbreaks of mosquito-borne illnesses, and catastrophic crop and infrastructure damage.

I write from coastal Manabi Province in Ecuador, which experienced the most fatalities in the country during the 1997-1998 event, totaling 104. There is awareness of severe El Niño predictions, but most people I’ve spoken with in the southern coastal town of Puerto Lopez think it will not be as severe as forecasts.

There have been warnings in past years that haven’t come to fruition, leaving many to think the coming months will be uneventful as well. Others are hopeful that an El Niño event could bring rains, ending a severe drought in the region. The current president, Rafael Correa, has significantly augmented the infrastructure in this South American country, leaving some to wonder how it would weather El Niño event.

Preparation

“I do not think we’re ready [for El Niño],” says Roque Mendoza, the former coordinator for the Secretariat of Risk Management for Manabi Province. “Lack of training, and people not knowing what to do in an emergency, is what causes tragedies to be magnified.”

Although one Puerto Lopez hotel owner I spoke with constructed a flood wall behind his property after El Niño flooding in 2002 and another homeowner is adding fill to raise the elevation of their property, I see few other people taking preventative actions. Recent governmental infrastructure improvements may help the situation, if planned and executed with natural disasters in mind.

In Puerto Lopez, a major beachfront construction project is building bridges over rivers and burying beachfront power lines under a new road, which could help prepare the town for strong storms. Residents, however, are concerned by the fact that the beachfront road is now at a higher elevation than some of the surrounding homes, potentially contributing to flooding. There is also a sense among many residents that this project doesn’t address more urgent needs, such as waste water treatment and access to potable water.

The Chamber of Agriculture of Zone II (along Ecuador’s southern coast) is urging the government to declare a state of emergency before the arrival of El Niño. They believe the government has not adequately prepared for the phenomenon, by clearing canals and dredging rivers, giving a path for the removal of flood waters.

In contrast, the Peruvian government has already declared a state of emergency in over half of the country’s regions. There, the government has been cleaning out coastal riverbeds, building flood walls, and distributing mobile bridges to avoid communities getting cut off if existing bridges fail.

Fisheries

Fishing is one of the primary industries in coastal Ecuador, and an El Niño event could have major consequences.

As many fish species migrate to colder waters and others lose weight from lack of food, the industry could be heavily impacted, resulting in lower yields. This is difficult to prepare for, other than seeking out fish species that are less impacted by a change in ocean temperatures.

There is also concern about 500 square miles of shrimp pools at risk of flooding, causing fear in the shrimp sector.

Agriculture

Drought has plagued many farmers in Ecuador in recent years, disproportionately impacting farmers without access to irrigation or wells. The predicted storms and floods could cause crop damage and landslides.

In other cases, the damage is more indirect. The predicted El Niño flooding could kill snakes, causing a spike in rodent populations that could damage sugarcane, for example. Infrastructure damage could make roads impassible, making it impossible to sell crops and causing income loss.

In Ecuador, many of the farms cultivate a monoculture of just one agricultural product, with thousands of seasonal labors used for the harvest. In the Ecuadorian lowlands, this is most commonly bananas or sugarcane. Large plantations are often less resistant to natural disasters because crop diversity can help mitigate the risk of crop failure. In addition, large plantations may waste a viable harvest because farm workers cannot be brought in for the harvest during a natural disaster.

El Niño rains, however, could break the drought and offer relief along the southern coast of Ecuador. Some of the cropland in Manabi Province is now fallow due to drought, forcing inhabitants to seek out other forms of employment. It does, however, put more pressure on income from fishing and tourism, which would be at risk if the El Niño event does materialize as predicted.

Increased health risk

Increased precipitation can lead to a spike in mosquito-borne illnesses in Ecuador, including malaria, chikungunya and dengue. Damage to sanitation infrastructure combined with an interruption in health services and lack of access to safe drinking water could lead to illness, especially among more vulnerable populations.

There have been public health campaigns in Ecuador to prevent mosquito-borne illnesses. Health professionals have walked around town, hanging posters and talking to business owners. Public service announcements on the topic are also relatively common, but unfortunately so are practices that encourage the breeding of mosquitoes.

At-risk populations

Natural disasters often disproportionately affect certain groups of people more than others. Having savings can serve as a buffer against loss of income and increases the means to evacuate during natural disaster. Owning medical supplies allows people to treat themselves for minor injuries and prevents the development of more major health ailments. Living in durable homes that are not constructed in floodplains mitigates the risk and damage of flooding. Overcrowding of housing and lack of access to safe drinking water that plague developing countries increase illness and the spread of infectious disease.

Environmental degradation

Massive and rapid deforestation has occurred in Ecuador’s coastal forests in since the 1950s, where 70 percent of the coastal mangroves have been removed by the commercial shrimp industry.

Deforestation compounds the impact of El Niño. Loss of vegetation increases the occurrence of mudslides, which caused the most fatalities in Ecuador during El Niño event of 1997-1998. Deforestation also contributes to soil erosion, which clogs waterways and causes floods.

“Disasters are not only caused by nature, but also by human hands and lack of prevention,” says Roque Mendoza.

Foreign residents may be Regulated

Foreign residents may be Regulated

Foreign Ministry studies impact of foreign residents on Cuenca; says some regulation may be required due to affect on local population

Claiming that the number of U.S., Canadian and British foreign residents living in Cuenca exceeds 5,000, Ecuador’s foreign ministry says that some regulation of the influx may be necessary to mitigate the economic impact on the local population.

Foreign residents at a Cuenca restaurant.

The ministry says that in addition to English-speaking foreigners living in Cuenca, there are another 4,000 Latin American immigrants in the city, mostly Colombians and Peruvians.

The ministry says that about 1,000 to 2,000 new foreign residents arrive in Cuenca each year.

Humberto Cordero, who heads the ministry’s office of human mobility, says Cuenca is “flattered” that it has become such a popular destination for foreigners but that the impact on local services, health care and prices must be considered.

“We need to maintain a healthy environment for both Ecuadorians as well as our foreign visitors,” Cordero said. “If we don’t plan for the growth, there can be negative impacts on social and cultural life. We also don’t want bad feelings to develop that could create a xenophobic atmosphere for foreigners,” he said.

Citing a study by the University of Cuenca, Cordero said that foreigners tend to concentrate in the center of the city, in the historic district and within a 15-minute drive of it. “This concentration can affect the local population in terms of availability of housing and services and increased prices,” he said. “We are looking at the impact on real estate, among other things.”

The figure of 12,000 U.S., Canadian and European expats was based on estimates provided by the University of Cuenca, not from Interior Ministry’s immigration office statistics, Cordero said. In the past, immigration authorities said it could not provide exact figures but estimated the number of U.S. and European residents at “about 5,000.” The Ministry said in late 2013 that there were about 38,000 U.S. and European residents living in all of Ecuador.

The U.S. Embassy and Consulate say that their “best guess” is that there are about 4,000 U.S. citizens living in Cuenca. “There’s no way for us to keep accurate records about this,” said former U.S. Guayaquil consul general David Lindwall. “It anybody’s guess.”

Cordero said that the foreign ministry will propose measures to lessen the impact of foreigners living in Cuenca but did not provide a date when the proposals will be announced.

Cell Phone, and housing news

Ecuador increases mobile phone import quota by 18%

The government of Ecuador has increased its annual mobile phone import quota to USD 250 million this year, reports local daily El Comercio. The national scheme allows companies to import phones to meet demand that cannot be met by domestic production, with users allowed to buy one device a year by post on payment of a 15 percent fee plus 12 percent in VAT. 

Ecuador's Housing Social Contract 

Quito, Jan 6 (Prensa Latina) President of Ecuador, Rafael Correa, revealed that his government halved the deficit of housing in the country, but still needs to provide 500,000 houses to repay this historic debt. According to the president, the country itself could solve the deficit in a few years with its own resources and profits, therefore he called for a vote of confidence for his political project during the opening ceremony of a complex of 204 homes in Los Rios province, located in the central part of the country's coastline. At the beginning of his government in 2007, the housing shortage was one million, and it has already managed to reduce it by half but the continuity of the Citizen Revolution is needed to ensure the development of works like this one. Correa criticized the fact that being Los Rios one of the most productive provinces in the country, it suffers high levels of poverty, explicable only by the inequality, exploitation and injustice that was submitted in previous decades. But the government is able to ensure a decent shelter for every Ecuadorian family, for their children, that if the others do not come, referring to the upcoming general elections scheduled for February 2017. That's what will be at stake in the upcoming elections, vote for the Citizen Revolution, urged the dignitary.

Could this work in Ecuador

Mexico's soda tax linked to 6 percent drop in sugary drink sales Researchers find significant decline in sales of sugary drinks in the first year, implying the tax is effective Mexico is the first country in the world to tax sugar-sweetened drinks in an effort to curb consumption blamed for obesity and related diseases — and it appears to be working. Analyzing the first release of data on the effects of the tax, researchers found that sales of sugary beverages across the country dropped by an average of 6 percent in the first year after Mexico implemented the 1 peso (about 6 cents) per liter tax on Jan. 1, 2014, according to a study report published Wednesday in the British Medical Journal. The decline reached 12 percent for December 2014, and it was even larger among poorer households, the study showed. “Mexico is a good example that the tax is working, and it can be implemented in other countries,” said Aranxta Colchero, a health economist at Mexico’s National Public Health Institute and lead author of the study. Researchers from Mexico’s National Public Health Institute and the University of North Carolina’s Department of Nutrition used nationally representative data gathered by Nielsen Mexico's Consumer Panel Services on food purchases between January 2012 and December 2014 from more than 6,200 households in 53 Mexican cities with populations of at least 50,000. During 2014, the study found, consumers in Mexico bought an average of 6 percent fewer sugary drinks than would have been expected without the tax, which increased the cost of sodas and other sugar-sweetened beverages by about 10 percent. They bought an average of 4 percent more untaxed drinks, such as bottled water. While Mexicans across income levels bought fewer sugar-laden beverages, it was the poorer households that seemed most affected by the taxes. Their sugary drink purchases declined by an average of 9 percent in 2014, and by 17 percent by the end of that year. The researchers said that while their study didn’t look at smaller towns or rural areas, it shows the tax has promise in deterring Mexicans from drinking so many sugar-sweetened drinks. They expect the effect to continue in the long term. Based on economic studies and the team’s previous work, Colchero said they could expect an even larger decline in soda sales with a tax of at least 2 pesos (about 12 cents) per liter — about a 20 percent price increase. But she added that the tax should be implemented alongside other policies, such as public health campaigns and labeling on food and drinks containing excessive added sugar. “We need to have potable tap water available for households and in schools,” she said. “People should be aware of what they’re drinking.” In an op-ed that accompanied the paper, Franco Sassi, head of the public health division of the Organization for Economic Cooperation and Development (OECD), lauded the results for confirming that taxation can be an effective way to encourage healthier behavior. However, he agreed with Colchero that such measures should complement other policies, adding: “Taxes can be part of a public health strategy — and Mexico’s is a great example for other countries — but they cannot be viewed as a magic bullet in the fight against obesity." Mexico is one of the world’s top consumers of sugary beverages. The average Mexican drinks 111 liters of sugar-sweetened drinks per year, while the average American drinks 103 liters a year, according to a 2015 Euromonitor report. Mexico also has the highest prevalence of diabetes among OECD countries, according to the Brookings Institution, a Washington-based think tank. In November 2015, the U.S. Food and Drug Administration issued its first-ever recommendation that Americans limit their sugar intake to no more than 10 percent of their daily calories, or roughly the equivalent of one soda per day. The World Health Organization made the same recommendation in March 2015, but added that cutting sugar to less than 5 percent of daily calories “would provide additional health benefits,” and would help prevent diabetes and heart disease.