I once had a crusty professor who summarily described the political history of most of Latin America as "bad, worse, and then riot." Judging by the ongoing tension in Bolivia, he may have been on to something.

It's always tricky to condense long-running political and ethical issues into a few pithy words, but here it goes. Bolivia's large indigenous population is quite poor and has generally been badly treated by the ruling elite (mostly of European descent) throughout the nation's history. Ever since large amounts of natural gas have been discovered, those indigenous people (and politicians who want their support) have asserted that the benefits of the discoveries should largely go to them.

As such, there have been ongoing battles about who should be allowed to own the gas (including some violent calls for nationalization), who should get the proceeds from the gas, and even who should be allowed to buy the gas.

And we're talking about a pretty good-sized amount of gas to boot. Bolivia has about half the proven natural gas reserves of Canada and could have more than 50 trillion cubic feet of reserves lurking underground. That makes Bolivia the second-largest gas player in Latin America (behind that other cuddly country, Venezuela).

Not surprisingly, the foreign companies most heavily invested in Bolivian gas fields are a tad worried these days, what with the higher taxes on production, an 18% royalty, and the president offering to resign. Based upon monies invested and gas reserves controlled, Brazil's Petrobras (NYSE:PBR) has the most at stake, with Spain's RepsolYPF (NYSE:REP) and France's Total SA (NYSE:TOT) also heavily involved.

Although a complete meltdown in Bolivia probably wouldn't hurt Total too much, it would be bad news indeed for Petrobras and Repsol -- both companies are counting on Bolivia as a major future source of natural gas production.

Hopefully cooler heads will prevail in Bolivia and a workable solution will be found. At this point, nationalization could be a disaster for all concerned. Not only would it burn the fingers of neighbors like Brazil and Argentina, but also it could lead to an aid embargo from the United States and international bodies. Bolivia just doesn't seem ready to stand without aid yet.

Bolivia and Venezuela may be harbingers of what is to come. As oil and gas become more scarce (and more valuable), governments may come under increasing domestic pressure to make sure that citizens benefit first and foremost from energy resources -- and pre-existing contracts be damned.

Investors in Petrobras and Repsol YPF should definitely keep an especially watchful eye on Bolivia. For other investors, this highlights yet again the importance of a geographically diversified range of production sources.

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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).