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Record oil prices mean windfall for Mexican government
With the price of oil skyrocketing, the Mexican government is set to reap some unprecedented windfalls from its state-run oil company Pemex. The cost of Mexican crude (which is always priced lower than sweet, light crude) topped $98 a barrel yesterday and experts tell the Reforma newspaper that Mexico could reap $51 billion in oil revenues this year. That is 72 percent more than the $29.9 billion the Mexican government had forecast for 2008.
So what does that windfall mean for Mexico? Officials are hoping it will offset the economic hard times leaching across the border from the United States. A common refrain here is that when the United States sneezes, Mexico catches a cold and there is great worry here that recession in the U.S. could be disastrous for Mexico.
The oil bonanza will also undoubtedly affect the raging debate here over the future of Pemex, which nearly everyone agrees is facing a crisis of declining oil reserves. The conservative government of Felipe Calderon wants to open Pemex up to foreign investment while leftist opponents fight anything with a whiff of privatization. But both sides agree Pemex desperately needs more money to fund badly needed exploration of new reserves and construction of new refineries. It will be interesting to say the least to follow the trail of the extra $21 billion.
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By eljefejesus
April 24, 2008 10:12 PM | Link to this
I would be interested to know how much of this is profit (if any) over the costs of running pemex…
By eljefejesu
April 24, 2008 10:14 PM | Link to this
…also, doesn’t Mexico also buy refined oil at higher prices?
By pelón
May 4, 2008 2:28 PM | Link to this
By all accounts Mexico should be an oil rich nation but they outsource the refining to the US. Is there a reason they can’t do it themselves? The potential in the Gulf of Mexico is promising from an economic point of view, but having it processed elsewhere will surely eat up much of the profit.
In a poor country that boasts a paisano who often trades places with Bill Gates as the richest man in the world I am not surprised that Mexico’s oil revenue hasn’t skyrocketed as appears to be the case in Venezuela.
By eljefejesus
June 4, 2008 11:16 PM | Link to this
Mexico stole the oil companies’ infrastructure in the 1930’s, and for many recent years has been running it as not just a state enterprise, but as a very old and inefficient state enterprise.
Venezuela has benefited from many private investments. They have had less time to make their oil infrastructure deteriorate. However, now that Hugo Chavez replaced the technically savy workers with his supporters, they are making quick work of leading the race to the bottom. Oil investments have diasppeared in Venezuela and in much less time that Mexico’s 70+ years, Venezuela is already seeing reserves drop as there is less money for discoveries.