Nail-biting over energy

There is increasing concern over energy production and supply in much of Latin America, with knock-on effects for economic growth and social stability.  In Argentina, the freeze on gas and electricity prices in effect since 2002 has had a disastrous effect on investment -- while output has risen by only 2.5% since 2002, demand has risen by 40%.  Since May, particularly inclement weather has led to cuts in energy supply to industrial users, but this has failed to avert blackouts and shortages for residential users, who have now been asked to conserve energy.  Gas shortages have also caused reductions and temporary cut-offs of exports to Chile, which depends on Argentina for 100% of its natural gas supply and both industry and residential users have been affected as a result.

Over the longer term, the decision by Bolivia to renationalise its hydrocarbons reserves last year, and Venezuela's recent takeover of majority stakes in all of the country's oil operations, have increased worries over future investment and production prospects.  Forced cuts in Bolivian gas output -- which have also affected the beleaguered Argentine market -- and rumours that Venezuela is finding it hard to keep up its oil production, may lead to more widespread energy problems in the short-to-medium term.