Culture Change Media International Editor
New York, NY - May 21, 2004

This is a sequel to my
reporting of May 3, 2004 and May 10, 2004.  I started this series with
"Necessity Causes Argentina To Do Good," hoping that by using the
present budding energy crisis Argentina will take steps in order to diversify
energy inputs — this keeping in
mind that in December Buenos Aires, coincidentally, will be the home of the 2004
meeting of the Conference of the Parties that signed the U.N. Convention on
Climate Change.  But, as per the energy policy released as promised by
President Kirchner on May 12, 2004, it does not look like Argentina has indeed
lived up to the substance of the promise. 

The Financial Times of May 17, 2004 states in its editorial: "Argentina’s difficulties stem
from the way the peso was devalued in December 2001.  By freezing
electricity and gas prices at the old rates the authorities created serious
distortions, reducing the willingness of companies to invest in order to
maintain infrastructure and develop capacity.  Artificially low prices have
been encouraging consumption at a time when economic recovery is in any case
pushing up demand.  Producers, who have increased output about 14 per cent
in the last 12 months, say they can no longer keep up with demand.  That
has resulted in rationing for many industrial customers."  What this
does not mention is the added truth — the oil and gas industry, having been completely privatized, found that more
money can be made by exporting these products rather then selling them to the
internal domestic market. 

The Argentine energy
crisis is basically a natural gas crisis now, enhanced by the secondary
electricity crisis.  It could have been hoped that part of the new policy,
in a country that could have rather large local money reserves (but is
nevertheless dependent on difficult international money markets because of years
of mismanagement, and a reluctance on the part of its own citizens to make long
term investments), will have the ideal conditions to consider new forms of
energy production.  This would include decentralized and appropriate wind,
solar, biomass, and perhaps even ocean-related technologies, in particular in
the remote rural sectors which are a major part of Argentina.  Further,
Argentine interests were in the forefront of ethanol-for-fuel production in the
1970s but were discouraged by the government at that time.  This was also
true for using natural gas for transportation in those days; but the compressed
natural gas was introduced at the end of the 1980s, leading now to waste by
inefficient vehicles. 

The newly released energy
policy reintroduces the government into the energy sector by creating Energia
Argentina S.A. (ENARSA) that will allow only 35% private ownership via the stock
market.  This company is charged with expanding the country’s natural gas
transport system and undertaking joint ventures in oil and gas
exploration.  Also, oil export duties will be raised to 25% from 20%, while
taxes on liquefied petroleum gas will be raised to 20% from 5% with the hope
that this will help redirect some of the products to the national market. 

Real rate rises have been decided for industrial power users and probable
increases will follow for many residential consumers.  President Kirchner,
having undertaken the trip to New York and Washington, can now address his
countrymen by saying that he must do some things that are not popular — increases in cost to the everyday citizen. 

The above
may be a needed first step:  But reorganizing the oil and gas policy first,
and starting to force the issue of money savings by conservation and energy
efficiency; does not yet make for an energy policy.  The only added item
was the decision to finish the Yacyreta hydroelectric plant funded by the
Argentine and Paraguayan governments with the help of the World Bank.  Part
of an energy policy should also be a review of less energy-dependent
life-styles, and clearly less energy-dependent production methods, that were
instituted by a populist political system that allowed energy to be dirt
cheap.  In order to open up the policy to non-conventional energy concepts —

prior to the December Buenos Aires meeting — it should be possible to get the
attention of the government with technologies discussed by the Renewables 2004
meeting in Bonn May 30 - June 4 2004.  The same goes for the climate change
issues which are indeed of importance to the citizens of Argentina.  These
are related also to the more immediate issue of the "ozone
hole."  Renewable technologies could help reduce greatly the need for
the oil and gas supplies that are at the root of the crisis.

(This article was first posted on CultureChange.org)