What do I think, What can I do?

Argentinian map in South America, from wikipedia

The news was specially important in Spain and Argentina. Argentinian president, Cristina Fernández de Kirchner , announced the expropiation of YPF, Argentinian oil company, the biggest company in the country, controlled up to this week by Spanish company Repsol. The diplomatic conflict is served, with several strong words from the presidents, company CEO, YPF former leaders firing in Hollywood style, etc…

I am not going to comment the economic, ethic, moral or juridical aspects of this issue. Surely there are many other better sources for it. I just want to emphasize the huge impact fossil fuels have had, and still have,  in our economy. Two data:

  • The finding of great oil resources in vaca muerta has been mentioned by all parts in this conflict, so the perspective of new oil reserves itself is enough to provoke huge impact.
  • Both Repsol and YPF are the greatest companies in their country.

Consequently, the problem is created, too much power and money is concentrated in a sole resource. And this has been present in the whole history of oil industry and XX century industrial society. How many oil wars have the world suffered in XXth century?

Nevertheless, energy in Argentina is a complex issue, as in most of the world. In spite of having this important resource Argentina is suffering in the last years a kind of energetic crisis, it needs more oil than it produces, it has difficulties to meet the raising electricity demand (1 GWh more per year) and both fuel and electricity prices have increased dramatically (yes, this is possible even without renewables). Whereas, as explained in the 30th page of this magazine, Argentinian renewable investment has been low, very far from the modest 8% electricity target, in spite of having very abundant resources of wind, rivers and sun too.

Growing prices of fuel and electricity have been one of the main arguments for the expropriation, considering YPF was not making enough effort to invest in new wells (A fresh opinion in this sense came from GreenPeace), not so different from USA drill-baby-drill. I think this is a wrong approach. Energy costs are increasing in different parts of the world because all possibilities are getting more expensive, fossil fuels, renewables and, of course, nuclear. Pretending there is a magic solution for that is not only unrealistic, it is counteracting, because it creates false expectations in public opinion. And, even more, the more we trust in fossil fuels the more get in trouble as a society, because climate change is starting to show consequences, and will show more of them and more expensive ones. So it does not seem cheap in the long-term.

Three final small thoughts:

  • Energy resources, companies,… are never fully private, there is always a government interacting with them. It is logical as this is a key service in any modern society, but it is frequently forgotten.  This case is a clear example. So public participation in climate change policies and subsidies is not so different to public participation in many other energy related issues.
  • Many Argentinian are saying that Argentinian oil should be owned by Argentinians. It is an interesting argument, going a little further we could ask if the oil should only belong to this generation Argentinians or should they remember the future inhabitants too? And leave some oil for them?
  • In the media discussion about the price os the stocks to be paid by the government to Repsol, Argentinian government argued that the environmental negative consequences should be accounted and taken out from the price. So they want to discount the externalities. Perfect, but why not do it regularly, next year, and next, and next? And include it in the electrical bill? Or in the cost comparison with renewables (in this case the relative costs would change clearly)? And the last, why now and not last year?

Comments on: "Argentina wants to recover the control of its fossil fuels, another energy war" (1)

  1. […] weeks ago Agentinian government decided to expropiate YPF, causing a bitter diplomatic dispute and showing once again the importance of fossil fuel control […]

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