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Cold snap prompts Chile to seek gas deal with old foe Bolivia
As temperatures fall, neighboring Argentina has cut some gas shipments to Chile, causing prices to skyrocket.
By Matthew Malinowski | Contributor to The Christian Science Monitorfrom the August 8, 2007 edition
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Santiago, Chile - A South American cold snap is causing Chileans to pay up to four times more for heat and electricity, and could spur the government to speed reconciliation with its bitter – but gas-rich – foe, Bolivia, observers say.
As temperatures dropped to near-record lows in recent weeks, neighboring Argentina has had to cut off some gas shipments to Chile in order to meet its own domestic demand.
Now, an increasingly disgruntled Chilean public is pressing the government to seek gas deals with other countries, including Bolivia.
"I believe that we need to leave behind these historic feuds once and for all and start an open and frank dialogue with Bolivia," said Chilean senator Nelson Ávila after the latest round of gas cuts last month. "Bolivia has some of the largest natural-gas reserves on the planet, and we could easily benefit from them."
In 1995, Argentina promised a cheap, steady supply of natural gas to satisfy Chile's residential, industrial, and electricity-generating needs.
Still, what was then perceived to be the cure-all to Chile's energy woes has since morphed into one of the country's biggest problems. Today, Chile imports nearly 100 percent of the commodity from its Andean neighbor. This winter's cold temperatures have exposed this dependency.
"Depending on Argentina is wishful thinking; they do not even have enough gas to meet their internal demands," Eduardo Frei, president of the Chilean Senate, told reporters recently.
In response to the shortages, many Chilean businesses, particularly electricity-generating companies, have reluctantly switched to diesel fuel. The situation reached a low point in June, the first month since the 1995 agreement that Chile used no natural gas to generate electricity. Diesel costs up to four times as much as natural gas and pollutes far more.
The consequences have been disastrous: electricity bills have risen sharply. Some industry analysts expect them to rise by as much as another 13 percent by winter's end.
Additionally, Santiago, the country's capital and largest city, has experienced a sharp spike in air pollution, including its smoggiest day since 1999.
New solution with an old foe?
In light of the increased pressure to find new energy sources, the Chilean government has begun to explore purchasing natural gas from neighboring Bolivia.
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