Gas and electricity are key driving forces for regional integration in Latin America, but the physical barriers and the differing pace of the deregulation and re-regulation process for both sources of energy in the different countries, complicates the adequate operation of energy markets. This paper analyzes the barriers that affect the development of energy markets and establishes the importance of eliminating these barriers to allow economic growth and a better standard of living for the region. Scenarios faced by the Latin American energy sector are strongly impacted by globalization, political and economical instability, technological development, stricter environmental standards and the need to supply markets at competitive prices. Market competition and energy integration allow for a more efficient allocation of resources, and contributes to regional optimization, but this process needs clear, transparent and harmonized regulations in order to be successful. The importance of natural gas as a source of power generation and industrial applications has increased significantly for technological and environmental reasons. However to ensure reasonable market prices and a stable supply of the resource physical and regulatory barriers must be removed. The process needs to facilitate the improvement of natural gas pipeline and power transmission infrastructure and to develop a framework of clear transparent and harmonized regulations. In particular the differences between natural gas market regulations and power regulations constitute significant barriers to the development of efficient markets. This process of removing physical and regulatory barriers will promote economic development and a better standard of living for countries in the region.
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