MercoPress. South Atlantic News Agency

Uruguay's oil bill jumps 32% to 1.8 billion US$ in 2008

Uruguay's annual oil bill is set to jump 32% to 1.8 billion US dollars if the barrel of crude remains on average at 130 US dollars admitted Uruguayan private sector consultants who anticipated a far “worst impact scenario” if energy prices keep spiraling.

For this year Uruguay's government owned oil and gas monopoly Ancap had estimated an oil bill in the range of 1.36 billion US dollars including crude, natural gas, refined produce and different lubricants plus freight costs. And it's precisely those additional 500 million US dollars which have the Uruguayan government concerned because, together with additional outlays to bolster the hydro generating capacity deficit, (exposed to lack of rainfall), they are moving "beyond rational boundaries". "It's this scenario which is forcing us to be most prudent with expenditure and this year's budget additional outlays must be limited to the original sum of 319 million US dollars", said Economy minister Danilo Astori who requested to be received by the leadership of the ruling coalition in anticipation of the budget congressional discussion. According to private consultants if the price of crude remains at current levels, Uruguay which imports all its fossil originated energy will have to increase the price of fuel at the pump and for home heating this coming south hemisphere winter. "This represents a serious risk for the Uruguayan economy beyond 2008" and this is particularly true since commodities prices have ceased to increase at the same rate as crude and "this complicates companies costs and international competitiveness". Uruguay which with normal rainfall can fulfill its electricity demand with energy from several dams has been suffering from a prolonged drought forcing the country to compensate with dearer imported (and limited) energy from its neighbors or fuel generated. Furthermore in spite of recent rainfall, which should help fill the reservoirs if this is extensive to the rivers' basins, a contingency fund of 380 million US dollars to prop the hydro electricity generating system and calculated for the whole twelve months was exhausted this month.