Management of Disaster Risks Derived from Large Fuel Subsidies of Natural Gas in Argentina

Abstract

Through a system of heavy subsidies, natural gas in Argentina has one of the lowest prices in the world. Residential users get the lowest price per m3 delivered, but the price for businesses is also very low. In comparison, prices for residential use in 24 countries listed by the International Energy Agency (IEA, 2011a) averages USD 0.79/m3; while in Argentina the price ranges from 0.02 to USD 0.10/m3, the lowest for the coldest regions where consumption in buildings is higher. Since 2003 the price per unit of energy of residential gas is 10–20 times lower than diesel, 5–10 times lower than firewood, and 10–20 times lower than electricity. As a consequence, customers have been misled by low bills and have solved the inefficiencies of buildings and appliances by very high consumption, postponing what otherwise would have been much-needed refurbishments. No public awareness exists on this situation. Attempts made by the government in 2009 to raise prices ended in public protests and court demands, and the largest increases had to be withdrawn. There are high risks of social unrest due to a lack of education and options related to fuel consumption. Recent serious social unrest as a result of higher gas tariffs in Punta Arenas, southern Chile, confirmed the behaviour observed in 2009 in Argentina. In both cases, no energy conservation measures have been done. Other risks include reduction or extinction of gas reserves, unsustainable budgets to support subsidies, discouragement of renewable energies, and pressure on native forests for firewood. Education and dedicated energy conservation measures are proposed to manage disaster risks derived from decades of subsidies.