With the US immersed in a highly politicized debate over how to reduce gasoline prices, which ultimately means increasing supplies, Latin America stands as probably the best available shot, one historically largely overlooked by policy makers.

Recent political instability throughout the Middle East and Africa, coupled with rising demand and proximity to Asia, and the market’s reaction to both, highlight the need to secure more oil supplies elsewhere to bolster US energy security.

US and global liquid fuel demand will only increase into the future, but a secure supply to temper future price volatility requires both higher domestic production and more secure imports, and both goals are increasingly threatened by a combination of geopolitical and economic factors.

On the domestic front, the forecast of liquids production will increase somewhat through 2020, mostly on the back of biofuels, but this cannot be done without massive government subsidies, currently under scrutiny. On the other hand petroleum output will not increase appreciably without a drastic overhaul of exploration legislation, especially to open up more offshore drilling.

By 2020, US liquids demand will increase slightly more than production, under the EIA assumptions, but oil demand for transportation fuels will increase by 2.5 million barrels per day by 2035.

That leaves liquids imports, which according to the Energy Information Administration (EIA) accounted for 62 percent of total consumption in 2009. This is the result of importing more than 50 percent of crude oil used in the country (about 8.5 million barrels per day from which 60 percent will lead to gasoline and diesel) plus 3 million barrels per day of imported gasoline.

Still, the lion share of additional conventional global liquids production until 2020 will not surprisingly come from the OPEC Middle Eastern countries, according to the EIA, with only a small increase in Africa.

Growth in unconventional liquids production in Canada and the US, which will increase by 1.4 million barrels per day by 2020 mostly from biofuels in the US and oil sands in Canada, are constrained by prices and shifting policies.

The best option is thus Latin America, which has the world’s second biggest oil reserves. The region though has been consistently off the radar screen to US policy makers, despite offering some of the best options to secure supplies in what unquestionably will be a future of increased competition for resources.

The EIA sees little change in overall production from Latin America, despite a 1 million barrels per day increase in unconventional liquids mostly from Venezuelan heavy oil deposits and Brazilian biofuels.

Venezuelan and Ecuadorian conventional production will shrink by 2020 by 0.4 million barrels per day, a scenario based on inefficient policies in both countries. Mexican and Chilean supplies decrease by 1 million barrels per day, while Brazil, Colombia, and the rest of South America will increase conventional production by 1.2 million barrels per day.

Latin America though could at least double its oil production under different political circumstances, namely in countries like Venezuela, but also with a shift in US policy toward the region to promote more investment.

Friendly investment policies in Colombia and Brazil will boost regional output as expected, but that is limited due to limited proven reserves in Colombia and the technical difficulties of most of Brazil’s offshore, deepwater, subsalt deposits.

Mexican production is expected to fall, not only because of regulations limiting foreign investment, but especially because of peaking wells. That could change with significant Gulf exploration, but that is highly uncertain considering Mexican politics and instability.

Ecuador, even with a revamp of policies to attract more foreign investment, does not have game-changing reserves, nor do Argentina, Peru, or most other countries.

And that leaves Venezuela, which experts believe holds at least 150 billion barrels in conventional and unconventional reserves. Under current trends, production there is not likely to pick up with the inefficient policies of firebrand President Hugo Chavez, and will likely only recover the estimated 1 million barrels per day output decline that started a decade ago.

That is precisely where US policymakers should be looking to alleviate its deteriorating security of supply. Venezuela could at least double its production of an estimated 2.5 million barrels per day this decade with appropriate investment, according to most analysts.

Instead of promoting investment in Latin America’s energy sector with a coherent policy, the US has looked the other way while American companies have gradually moved out of the region, only to be replaced by European and Chinese companies.

There is no easy answer, but a new approach is required. It will inevitably involve dealing with Chavez, who most analysts see remaining in power at least for most of the decade. Efforts to alienate the anti-American president have backfired and now even Colombia, the most important American regional ally, is moving to seek its own stable relations with Venezuela, faced with Washington’s apathy.

Latin America could still achieve significant production increases if Venezuela gets its act together with the help of other global players, mostly Chinese. But it’s becoming ever more likely that the US would not benefit as much as it could from a bonanza.

So why don’t the White House and Congress put off at least some of its unhelpful, pre-electoral, unrealistic debates about market manipulation, oil company subsidies, and the likes, and redraft American policies to Latin America?

That is the best hope to alleviate pump prices and address American security, this decade and beyond.