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Argentina's fracking boom transforms rural town but falls short of economic salvation
A decade after Argentina legalized fracking in the vast Vaca Muerta formation, the once-sleepy town of Añelo has become a bustling hub-yet the windfall from oil and gas extraction remains insufficient to fix the nation's deep-rooted economic struggles, experts warn.
Mechanic Fabio Javier Jiménez arrived in Añelo, a remote settlement 1,000 km southwest of Buenos Aires, when it lacked reliable water, gas, or electricity. His family's tire repair shop, initially stranded in the sand dunes on the town's outskirts, now sits at the heart of a logistics corridor swarmed by oil tankers and heavy lorries. Official data shows daily vehicle traffic surged to 24,956 in 2024, including 6,400 trucks-a direct result of the fracking boom that began in 2014.
The rise of Vaca Muerta
The 30,000 sq km geological formation, first identified in 1931, now hosts 3,358 active wells (as of February 2025), split nearly evenly between oil and gas. Fracking-pioneered in the U.S. in the early 2000s-unlocked these reserves by injecting high-pressure water, sand, and chemicals to fracture rock and release trapped hydrocarbons.
Argentina's state-owned YPF and U.S. giant Chevron launched the first commercial operation. Today, Vaca Muerta supplies over half of the country's oil and gas, according to Nicolás Gadano, chief economist at Empiria Consultancy and a former YPF official. Its output is cheaper than conventional extraction elsewhere in Argentina, where aging fields yield diminishing returns.
"We haven't found new conventional deposits that compete on cost-except for offshore gas in the southern basin. Onshore fields are three to four times more expensive than Vaca Muerta," said Nicolás Gandini, director of energy-focused outlet Econojournal.
Energy self-sufficiency-and its limits
Vaca Muerta's output has eliminated Argentina's reliance on costly energy imports, even turning it into a net exporter. In 2024, the sector generated a $6 billion trade surplus, though lower global prices may temper 2025's gains, Gadano noted. Gandini called the shift "very important" for a country that faced deficits just years ago-but cautioned against overestimating its impact.
"There's an overrepresentation of Vaca Muerta's potential to solve Argentina's structural issues," Gandini said. "Beyond energy, the country lacks dollar-generating sectors. Agriculture faces stagnation, and mining lags far behind."
Investor hesitancy and infrastructure gaps
Critics argue that capital controls-limiting firms' ability to convert pesos to foreign currency-deter international investors. "Companies say, 'We make money but can't repatriate it; we're forced to reinvest,'" Gadano explained. "That's not how global firms operate."
President Javier Milei eased currency restrictions for individuals in April 2024, and his party's midterm election victory in October 2025 raises hopes for broader reforms. Yet infrastructure bottlenecks persist: Gustavo Medele, Neuquén Province's energy minister, acknowledged gaps in pipelines, roads, and rail links, though he insisted the province "is doing what it can."
Political consensus vs. environmental dissent
Vaca Muerta enjoys rare cross-party support, with all major factions backing expansion. This unity has sidelined environmental critics, said Fernando Cabrera, director of advocacy group Observatorio Petrolero Sur:
"We're losing the public debate. Provincial and national legislatures overwhelmingly favor exploitation, creating a very uneven dynamic."
Local winds of change
For Jiménez, the boom translated to exponential growth: his garage now services 20 vehicles daily, up from just two a decade ago. He recently opened a second branch. Yet he remains skeptical of broader promises:
"Oil and gas will last for years, but Argentina's economic and political volatility won't disappear," he said.
Añelo's population ballooned from 10,788 in 2010 to 17,893 in 2022-a 66% increase-while weekday commuters add another 15,000. The transformation underscores both the opportunities and limitations of Argentina's energy gamble.
