Energy Resources in Argentina:
Analysis of Income1
Marina Recalde*
Date submitted: July 26, 2011. Date accepted: November 15, 2011
Abstract

This paper offers a theoretical discussion of the concept of income in classic economic literature and an estimate of hydrocarbon income in Argentina in the period following the deregulation of the oil sector and the sale of the State company YP S.E. The following are among the main considerations: the increase in joint income after change in national exchange rate policy in 2002 and the rise in energy prices, producer participation in income acquisition for the period 1993-2003, the rise in the income acquired by the National State and consumers by retaining oil exports and the lack of sustainable energy objectives through secondary income distribution on the part of the State.

Keywords: Energy policy, income, distribution of income
INTRODUCTION

Economic development among major world nations has been based on or affected by the use of natural resources and natural availability. In this area, energy resources play a fundamental role. The importance of energy resources for economic development far exceeds the current understanding of the fact that energy is the foundation for growth (Stern, 1997: 199-200, Cleveland, 2003:5-8; Beaudreau, 2005: 217-219). The economic weight of the energy industry is so great that the added value of each rung of the energy chain can explain a high percentage of a countrys Gross Domestic Product (GDP).

Like most countries and regions around the world, Argentina is highly dependent on its hydrocarbon resources. According to energy data from the National Energy Secretary, in 2009, hydrocarbons represented 86% of the domestic primary energy supply, with natural gas responsible for 52%. The role of hydrocarbons at the national level has grown constantly since the discovery of the gas deposit Loma la Lata, in the Cuenca Nequina, in the mid1960s. A policy meant to substitute the primary energy model also contributed to this growth. This situation has remained stable in spite of the fact that hydrocarbon reserves have been constantly diminishing for over a decade, which greatly threatens the systems sustainability (Recalde, 2011: 3863-3864).

One of the main characteristics of energy resources is income generation. Income resulting from exploiting natural resources has been one of the most discussed aspects of economic theory. Few concepts have been so popular in literature, and most of the controversy surrounds the origin and distribution of income among the various agents involved. Currently, income resulting from exploiting hydrocarbon resources is high. As such, the question of the moment revolves around who should be in charge of these resources, as their distribution and usage has increased. This discussion is crucial for energy policy and by extension, the countrys development policy, which further underlines the importance of discussing this question in great detail.

Given this context, the purpose of this paper is to analyze the evolution of hydrocarbon income in Argentina from 1993-2007, and its distribution among the principal agents involved in the energy chain. To facilitate this analysis, the paper is structured into two sections. The first section explores contributions from existing literature on the topic of income, and seeks to determine which approach works best for hydrocarbons. The second section estimates the income from hydrocarbons for Argentina, and briefly discusses its primary distribution, in the countrys specific legal and regulatory framework.

1A preliminary version of this work is part of the authors Doctoral thesis in Economics for the Economics Department of the Universidad Nacional del Sur Baha Blanca Argentina. The author would like to thank the CONICET and the UNS for financing to carry out this research project. The author also thanks three anonymous editors of this work for their contributions to the research.

* Post-Doctoral Fellow (CONICET) and teaching assistant at the Universidad Nacional del Sur, Argentina. E-mail address: mrecalde@uns.edu.ar