Energy Resources in Argentina:
Analysis of Income
Marina Recalde
FINAL CONSIDERATIONS ( ...continuation )

In Argentina’s case, for example, one of the principal characteristics of the country’s oil history has been a constant push from the National and Local States for ownership of the resource, and with it, ownership of energy income and the power to make decisions regarding the activities and exploitation of the same. This dispute has ended up in favor of granting resource ownership to the local regions, according to Law 26.196, as the local entities have ownership of these resources in their own territories and up to 12 miles offshore. This calls to mind an aspect that is beyond the scope of this analysis, but is directly related to development: the transfer of ownership and control of a strategic resource whose exploitation goes beyond a local impact, and whose reach extends to the level of national development (Recalde, 2010: 102-105, 134-137).

Regarding the results of our estimates, the growing evolution of hydrocarbon income in the country is notable, particularly following the devaluation effect on costs expressed in Argentinean pesos and income in American dollars, which came about following the convertibility regime crisis in January 2002. This aspect has been further reinforced by the increase in the price of natural resources on the international level following the entry and growth in the world market of countries like China. Moreover, in this sense, it is important to underline the initial effect of the change in national convertibility policy on income appropriated by the producers, and recent price controls on resources have favored a transfer of income from producers to consumers.

Since its establishment, the imposition of deductions on diverse natural resources, particularly energy resources, has constituted a major source of income for Argentina’s National Administration. As highlighted by many authors and debates, this is important because it provides a high surplus, which allows the country to maintain its economic model. However, from the point of view of this author and this work, the importance of energy resources for development, in combination with the national energy system’s dependence on hydrocarbons, and the fact that the future of reserves for both resources is decreasing, call for the state to make special allocations of appropriated income towards the energy sector. In this sense, given that this income is derived from the exploitation of an exhaustible, non-renewable source, the fiscal approach towards this income should be aimed at achieving sustainability in the development system. This would imply using resources to invest in sustainability of the sector, not only through policies that allow for expansion of hydrocarbon reserves, but also to diversify the primary energy model with a long-term vision, and above all, to seek security in the energy supply and universal coverage for energy services.22

22 As mentioned previously, analysis of secondary hydrocarbon income distribution is complicated by existing information. Still, the State’s expenditures towards the energy sectors in the past years have mainly come in the form of highly questionable energy subsidies, taking into account their impact on the efficiency and equity of the system, while the existence of specific programs financed by the State to diversify the energy model has been relatively constant throughout the years. For an analysis of the programs to diversify the energy model and policies to promote renewable energy sources, please see: Guzowski and Recalde (2008) and Recalde (2010). For a study on the impacts of energy subsidies on efficiency and equity, please see Navajas et al. (2008).