The small Argentine town of Añelo has undergone a dramatic transformation partially due to the fracking boom that began in the region in 2014. This shift towards extracting oil and gas from the Vaca Muerta formation has not only revitalized the local economy but also raised larger questions about its effects on the nation’s economy as a whole.
Añelo, located approximately 1,000 kilometers southwest of Buenos Aires, was once a sleepy town with limited infrastructure, lacking essential services such as mains water and gas, and experiencing frequent electricity outages. For mechanic Fabio Javier Jiménez and his family, who owned a small tire repair shop, life was relatively quiet. However, the discovery and subsequent extraction of fossil fuels in the area breathed new life into Añelo, transforming it into a bustling hub.
The population of Añelo surged dramatically from 10,788 in 2010 to approximately 17,893 in 2022, marking a growth of over 60%. This rapid increase has also brought a significant influx of workers, with about 15,000 additional individuals entering the town on weekdays. Consequently, the town’s infrastructure has faced the pressures of its newfound popularity, as traffic, particularly from oil tankers, has increased. Official reports indicated a total of almost 25,000 vehicles entering the town daily, underscoring how fracking has altered the dynamics of the community.
The Vaca Muerta geological formation is rich in oil and gas reserves and covers around 30,000 square kilometers (approximately 12,000 square miles). Initially discovered in 1931, it wasn’t until fracking was legalized in 2014 that the deposits could be commercially exploited. The fracking process, primarily used in the United States since the early 2000s, involves injecting a mixture of water, sand, and chemicals into the ground at high pressure to fracture rock formations and release trapped oil and gas.
As of early 2023, there were 3,358 active wells in Vaca Muerta, producing over half of Argentina’s oil and gas. The first significant operation in the area was undertaken by Yacimientos Petrolíferos Fiscales (YPF), Argentina’s state-owned oil company, in partnership with Chevron. Experts like Nicolás Gadano, an economist and former YPF official, highlight that fracked oil is typically more cost-effective than conventional oil extraction due to the challenges associated with older deposits.
The impact of this fracking revolution extends beyond local economics; it has potentially restored Argentina’s energy independence after decades of shortages and reliance on expensive imports. The country reported a substantial energy sector surplus of around $6 billion last year. While this marks a significant turnaround, some economists caution against over-reliance on Vaca Muerta for overall economic stability. They argue that despite its temporary economic boost, Argentina is still grappling with historic high inflation and a looming national debt crisis.
While the fracking industry has triumphed in the short term, issues such as Argentina’s poor credit rating deter international investment. Companies express frustration over restrictions that prevent them from exchanging pesos for foreign currency, making it difficult to repatriate profits. Government changes, including recent measures by President Javier Milei to ease currency exchange controls, hint at a shift towards addressing these barriers.
Environmental concerns also play a pivotal role in this dialogue. Critics of fracking argue that the coal and gas extraction practices threaten local ecosystems and public health. Fernando Cabrera from the Observatorio Petrolero Sur laments that pro-extraction policies dominate public discourse, leading to a noticeable imbalance in the influence of pro-industry narratives versus environmental concerns.
In the landscape of Argentina’s complex economy, the rise of Añelo symbolizes the intersection of opportunity and challenge. For individuals like Jiménez, the local mechanic whose business has thrived amidst changing fortunes, the future may look bright, but systemic economic issues remain unresolved. In the end, the effects of Vaca Muerta on Argentina’s national economy illuminate the delicate balance between energy independence and sustainable, equitable growth.
