ARGENTINA HIKES PRICES ON GAS IMPORTED TO CHILE, CHILE SAYS ARGENTINE ACTIONS ARE "FRUSTRATING".
The Argentine government's decision to increase the price of the natural gas it exports to neighboring countries and to charge foreign motorists higher prices for gasoline have strained its relations with the governments of those countries, especially Chile. The trans-Andean relationship between the two countries has degraded since members of Chilean President Michelle Bachelet's Cabinet complained about the increases. The decision by Argentina to increase rates came after Bolivia increased the cost of gas it exports to Argentina.
Argentina doubles natural gas tax for Chile
In July, Argentina more than doubled its tax on natural-gas exports to neighboring countries, boosting Chile's cost for the fuel by as much as 92%.
Argentina, the main gas supplier to Chile, was passing along a 47% price increase that Bolivia imposed the month before. Struggling to lure investment in its energy industry, Argentina has been importing gas from Bolivia since 2004 to help meet local demand and fulfill part of its export contract with Chile.
The tax increase deepened tension between the South American neighbors, said Jose Luis Espert, head of Espert & Asociados, a Buenos Aires-based research and consulting company that counts several Chilean companies among its clients. "In Chile, the mood toward Argentina is awful," Espert said.
The surge in the cost of the fuel will probably drive up electricity prices in Chile, the world's biggest copper producer, by early next year, said Cristian Ramirez, an analyst at brokerage Larrain Vial SA in Santiago. About one-third of Chile's electricity is generated by gas-fired power plants. Many have had to convert to diesel fuel or reduce production since the start of a regional energy crisis in 2004 (see NotiSur, 2004-04-30).
Chilean Energy Minister Karen Poniachik said she didn't have an estimate on how much the increase will push up electricity rates in Chile. She said that gas prices would rise at the nations' border to as high as US$4.80 per million British Thermal Unit (Btu), from as low as US$2.50 per million Btu.
Even with Chile's protests against the rate increases, the upward pressure on gas prices is likely to continue, as summer heat leads natural-gas futures markets in the US to push the price of gas to new heights in July and August, with the cost of a million Btu consistently above US$7 and sometimes reaching as high as US$10.
In the Southern Hemisphere, winter cold strained energy flows between countries, with...
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