Energy shortages are the factor that most threatens to derail the economy—the southernmost Magallanes region has crude oil in small amounts only, so the country must purchase nearly everything on the international market. It has a little more natural gas (recent discoveries in remote Tierra del Fuego are promising, but unlikely to satisfy the shortfall); neighboring Bolivia and Argentina have ample supplies but are politically unreliable.

Chile has some sustainable energy resources, primarily hydroelectricity, but projects such as damming the Río Biobío have not come close to satisfying growing demand. The remaining potential hydroelectric sites—continental Chiloé’s Río Futaleufú and Aisén’s Río Baker—are remote and would involve serious environmental disruption, but they may well be developed.

In the Sur Chico, which lacks natural gas infrastructure, even cities the size of Temuco (population 233,000) and Valdivia (population 130,000) still use firewood for domestic heating and cooking). This is theoretically sustainable, but it brings serious air pollution problems—after Santiago, Temuco probably has the worst air quality of any Chilean city.

Alternative energy sources have not yet been seriously explored—even though the northern deserts, where the mining industry is the major user, have almost unlimited solar potential. The Patagonian steppes of Aisén and Magallanes have wind power potential; a new wind farm has recently appeared on Coyhaique’s outskirts.