July 18, 2008

Pemex Plans Fuel Supply Reduction

In an unpopular move, Mexico’s state-owned Pemex oil company announced it will reduce gasoline supplies for Baja California soon. Ramiro Zuniga Salazar, president of the Onexpo Baja Gasoline Station Operators Association, said Pemex informed gas station operators in a July 7 letter that it would begin reducing gasoline deliveries of the Magna brand from 80 million liters to 72 or 74 million liters per month. A gallon is equivalent to 3.8 liters.

Coming on top of diesel shortages in recent weeks, the decision spurred worries of negative economic consequences for different economic sectors.

“The federal authorities are showing a lack of respect to the Baja California community,” charged Joaquin Avina Sanchez, president of the Tijuana Gasoline Station Owners Association.

It wasn’t immediately clear if Pemex’s new policy will affect other regions of the border outside Baja California.

Pemex’s decision was attributed to a 30 percent increase in demand for gasoline and diesel in Baja California during the past few months. Some blame the consumption surge on US citizens who drive across the border to take advantage of cheaper Mexican fuel prices and fill up their tanks. A gallon of gas costs $2.61 in Mexico, compared with more than $4.00 per gallon in California. Also well above the $4.00 mark, diesel sells for $2.20 in Mexico.

The Mexican government subsidizes gasoline prices to the tune of $12 billion annually, estimated Rafael Amiel, managing director of Latin American services for the Washington, D.C.-based firm Global Insight.

Frontera Norte Sur has received e-mails from a couple readers in Baja California and California who report fuel scarcities south of the border and opportunistic profiteering north of the border. According to one reader, Mexican truckers are filling up 55 gallon tanks with diesel and then selling it in the Los Angeles area for $3.50 per gallon.

The irony of Mexican border gasoline being sold or consumed in the United States is that Mexico currently imports an estimated 323,000 barrels of gasoline every day, according to Global Insight’s Amiel.

Other sources credit the border gas crunch on an unexpected demand from Mexican consumers who routinely gassed-up while in the United States but now do it at home. In particular, the Mexican trucking industry that services Tijuana, Ciudad Juarez, Rey-nosa and other cities where maquiladora plants and cross-border commerce are important is said to be an especially loyal new customer.

Challenging the notion of a fuel shortage, Baja California Governor Jose Guadalupe Osuna Millan urged Pemex to improve its distribution system. “The diesel is in Rosarito,” he said. “There are no lines of US citizens.”

Mexican consumers, however, have begun complaining of service denials or extortions by gas station employees.

Mario Osuna Jimenez, Baja California delegate for the Federal Attorney General for Consumer Protection ({Profeco) said his office has received 10 complaints from citizens in the last three weeks. According to Osuna, some customers reported they were either refused gasoline or told the fuel would cost above the established price. The Profeco official said three teams of agency inspectors are in the field checking for “possible anomalies.” A report is due later this week, he said.

Together with local businessmen, officials from Baja California state government were scheduled to meet with Pemex July 9 to discuss the fuel supply situation facing Baja California.

As Baja California’s fuel problem unfolded, Pemex reiterated its contention that Mexico is simply running out of oil. In a recent letter to the lower house of the Mexican Congress, Pemex said the country has only 9.2 years of proven oil reserves remaining.

Pemex’s congressional report comes at a time when the political battle over President Felipe Calderon’s proposed energy reform law is heating up in the Congress and in the streets, where a mass movement led by former Presidential candidate Andres Manuel Lopez is gathering steam. If approved, President Calderon’s legislative package will open the door to greater foreign investment and involvement in the energy sector.

The Mexican press, meanwhile, continues to run stories on the US fuel price crisis, emphasizing the economic hardships experienced by many on this side of the border. A story that received attention this week was about two women, one from Kentucky and one from Indiana, who were arrested on prostitution charges for allegedly offering sex in exchange for gasoline or a gasoline card.

Frontera NorteSur (FNS): on-line, U.S.-Mexico border news Center for Latin American and Border Studies New Mexico State University Las Cruces, New Mexico

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