MercoPress. South Atlantic News Agency

How South American countries cope with oil crisis?

With the world oil and refined products crisis expanding particularly following the impact of hurricane Katrina which virtually knocked out 30% of United States domestic oil production, how do South American countries cope with the situation?

Actually it all depends whether the country is an oil exporter, which usually highly subsidizes domestic consumption, or if the country is a net importer and must abide by international market rules and let prices surge.

Venezuela, the world's fifth exporter is estimated will divert 2 billion US dollars in keeping the gasoline at 4 (four) US cents per litre.

In Argentina, an oil and natural gas rich country, gasoline costs 64 cents to the litre. But Argentina could become a net importer of energy in the near future if domestic production prices which remain frozen since the 2001/02 crisis are not allowed to adapt to world circumstances.

Ecuador is also an important producer of crude and government owned company Petroecuador dominates most of the market. Petrol is subsidized at 44 cents to the litre. Colombia exports some oil surpluses and Ecopetrol helps in keeping gasoline prices in the range of 61 cents the litre.

Peru on the other hand which has Petroperu, considered reasonably well managed government owned company, has allowed the full impact of the 40% rise in oil prices of the last eighteen months to fully reflect in the gasoline stations. But is considering a review of taxes to avoid further increased.

In Brazil gasoline averages 1,08 US dollar the litre. The country has an aggressive exploration and production policy with government owned Petrobras, which has lately opened to private associates. Brazil is a leading country in offshore technology and production, and has almost reached oil self sufficiency.

In Chile gasoline averages 1,12 US dollars to the litre and in oil starved Uruguay gasoline at the pump costs 1,26 US dollar.

However Brazil, Chile and Uruguay have seen their currencies appreciate considerably against the US dollar which has helped ease the impact of the oil bill.

In United States, following hurricane Katrina, gasoline was selling the equivalent of an estimated 75 US cents per litre.