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Argentina to get fuel from Venezuela

Dan Grech Apr 18, 2008


Renita Jablonski: Buenos Aires is still under a cloud of smoke today. The Argentinean government says farmers set fires in nearby regions as a easy way to clear pastures. The smoke’s caused road closures, auto accidents and the shutdown of the local airport. This is happening as the Argentinean administration is trying to ease tensions with farmers. This week a plan was announced to help with the rising price of diesel. From the Americas Desk at WLRN, Marketplace’s Dan Grech reports.

Dan Grech: Argentina will allow 64 million cubic feet of tax-free diesel into the country. That should be enough to satisfy the higher demand during harvest time and the coming winter months. But this tax-free fuel comes with some strings attached. Atop the list: the imported diesel must be bought from PDVSA. That’s Venezuela’s state run oil firm. Venezuela has lent billions to help Argentina recover from a 2001 economic collapse. Analyst Daniel Kerner with the Eurasia Group says Argentina’s just returning the favor.

Daniel Kerner: What the government really is trying to do, I would say, is to encourage this energy alliance with Venezuela.

But Kerner says Venezuela can’t solve Argentina’s fundamental problem.

Kerner: The threat of energy shortages is intensifying every year.

With diesel prices fixed at an artificially low price, demand consistently outpaces supply.

I’m Dan Grech for Marketplace.

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