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26 | THOMAS ANDREW O’KEEFE utility bills are reputed to be among the highest in Latin America, averaging 30 per- cent versus 11 percent in Chile or 1 percent in Venezuela. See, Fundación para el Desarrollo Eléctrico, Informe Sobre la Demanda del Consumo Eléctrico Argentino (Buenos Aires: FUNDELEC, 2003), Annex I. Chile’s Choices: Maintaining Growth and Securing Supply Oscar Landerretche INTRODUCTION The politics of oil and gas has two sides, which are often complementary. One is the use of influence and force by powerful countries in order to secure and control energy resources. The other is the use of oil and gas resources as a source of international power for the countries that control them.1 Small countries like Chile are dependent on energy imports, and as such cannot seek anything other than free trade, adequate rules of the game, and strong international institutions in order to secure its access to international energy markets. The Chilean economy has experienced rapid economic expansion since 1986 at an annual average rate of 5.8 percent,2 increasing not only its demand for energy but also its dependence on energy imports. While total Gross Domestic Product grew at an annual average rate of 5.6 percent between 1990 and 2006, primary energy demand grew at an annual rate of 4.8 percent and the demand for electricity grew at an annual rate of 7 percent. Meanwhile, imports of pri- mary energy increased from 45.1 percent of the total supply in 1990 to 66.9 percent in 2006, with natural gas and coal registering the highest growth (see Table I). Chile’s growing reliance on energy imports, particularly on natural gas, has not been without consequences. In April 2004, Argentina began restricting natural gas exports to Chile. In 2008 Argentine supplies to Chile have decreased to an amount that satisfies only one-third of Chile’s residential demand, with no supply for industry or power generation: restrictions reached levels above 90% of total requirements by mid-2007 and have remained above that figure most of the time throughout the first semester of 2008.3 Chile has been forced to reconsider its energy policy, which—before Argentina’s export restrictions—was based on increasing natural gas and power imports from Argentina. Some policy changes include incentives for using non- traditional renewable sources as well as the construction of liquefied natural gasPDF Image | Energy and Development in South America
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