Oil “Emergency” Spurs New Efforts to Reduce Use

September 9, 2005

STARTING in November, gas stations in the northwestern province of Guanacaste and the Central Pacific will offer gasoline with 10% ethanol – the latest government effort to reduce oil use in response to rising international prices, at nearly $66 a barrel this week.Costa Rica is experiencing an “absolute emergency” regarding international oil prices, President Abel Pacheco said Tuesday during the press conference following his weekly Cabinet meeting, where the ethanol solution was discussed.National Oil Refinery (RECOPE) officials, in collaboration with Brazilian experts, have just completed an ethanol study, concluding that Costa Rican cars, without any technological change, can run on fuel consisting of 10% ethanol without damaging cars or the environment.The mixture of regular gas with 10% ethanol will be available at 62 gas stations and then evaluated before it is made available nationally.Ethanol is a biodegradable alcohol that is generally distilled from corn or sugar. Oil shortages in the 1970s prompted Brazil to begin its ongoing ethanol program.Most of Brazil’s drivers use a fuel that contains 25% ethanol; other new flex-fuel cars can run on straight ethanol. Ethanol sells for approximately half the price of regular fuel.Ultimately, when ethanol is used on a national level, it could result in a reduction in the price of regular gas by about ¢10 ($0.02) per liter, officials said.To further reduce the country’s dependence on oil, the Costa Rican Railroad Institute has announced the much-anticipated return of the train between Pavas and San Pedro. The train will begin its weekend runs on Saturday and weekday runs Sept. 28 or 29.Pacheco rejected suggestions that Costa Rica could buy oil at a reduced price from Venezuela, saying that members of the Organization of the Petroleum Exporting Countries (OPEC) cannot independently reduce the price of oil. What Venezuela is offering is widened credit in oil purchases, he said.Caribbean leaders this week entered into an agreement with Venezuela in which their governments will pay market price for Venezuelan oil, but are required to pay only a portion of the cost up front, with the rest financed over 25 years at 1% interest. The deferred payments can be paid partially with goods or services. Venezuelan President Hugh Chavez is reportedly considering offering a similar program to Central American countries.The region’s Presidents agreed Monday in an emergency summit to send their Finance Ministers to Venezuela and Colombia to discuss the fuel situation (see separate story in The Nica Times). Beginning last month, officials here took steps to reduce gas useby reducing traffic – changing public employee work schedules and restricting driving in downtown San José (TT, July 29).These measures have been questioned in recent weeks by press reports that conclude gas use has actually increased in some cases.Environment Minister Carlos Manuel Rodríguez defended the measures Tuesday, saying the results of studies on their effectiveness will not be known for several months.If use does not decrease, and gas prices continue rising, Rodríguez said other, stronger measures will be implemented.

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