Will Energy Prices Zap Mexico?
Higher oil prices have usually been a boon to the economy. Trouble is, the country imports much of its refined fuel
At first blush, the hike in oil prices wrought by the twin tempests of late summer – hurricanes Katrina and Rita – is good news for Mexico. After all, costlier oil has always meant more money for the government. And there has been a strong positive correlation between the strength of the Mexican peso and the price of crude.
But in fact, the runup in energy prices poses problems for the Mexican economy. For starters, Mexico imports both refined gasoline and natural gas. Second, the government-controlled oil concern, Pemex, may have difficulty passing on higher costs to the country’s consumers. And finally, Mexico’s export industries are sensitive to factory demand north of the border.
Oil revenues make up 35% of Mexican government income, up from 30% a few years ago, when oil prices were lower. Through the first five years of President Vincente Fox’s six-year term, oil prices have been unusually high.
The average price today of a barrel of export Mexican crude is about 60% higher than the average historical price. The average over 2004-05 is expected to be just over $36 per barrel. In the last two years of the Zedillo Administration, 1999 and 2000, it was slightly over $20.
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Mexico's Fox announces new energy policies
Mexican President Vicente Fox on Monday announced a series of measures designed to keep energy costs down for millions of Mexicans and increase the country's energy independence.
The measures include limiting price increases on gas and electricity and reforms to allow more private investment in exploration and production of natural gas.
World energy prices have soared amid the effects of Hurricane Katrina, and Fox said Katrina not only threatened to cause significant increases in energy prices, but also could affect supplies to Mexico.
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Senators push for drilling in Eastern Gulf of Mexico
A bipartisan group of powerful senators on Tuesday proposed opening up a large chunk of the Eastern Gulf of Mexico to energy production that would come to within 100 miles of Florida's shores Sen. Pete Domenici, R-N.M., who chairs the Senate Energy Committee, said high home-heating energy prices are yet another reason to increase the domestic natural gas supply by opening up an area off Florida called Lease Sale 181.
"This bill will not interfere with the viewscapes from the coast, the environment or the military activity in the area," said Domenici, who
Mexico to lose money on energy subsidies
Temporary limits on the price of natural gas and liquefied natural gas will cost Mexico's government about US$850 million (euro690 million) by the end of the year the head of Mexico's state oil company said Tuesday.
Most of the figure is lost revenue due to the government's decision to limit prices for distributors to blunt Hurricane Katrina's impact on the world oil market, said Luis Ramirez Corzo, director-general of Petroleos Mexicanos.
President Vicente Fox on Monday announced measures to keep energy costs down for millions of Mexicans in response to soaring world prices caused partly
High Oil Prices Benefit Mexico
The high prices of Mexican oil, overvalued at nearly 20 dollars due to geopolitical factors, are temporarily benefiting the domestic economy, Energy Secretary Fernando Canales said on Friday.
According to the official, such effect results from the fact that the country exports an average of 1.6 million barrels a day, but the situation will not be favorable for the mid and long terms as it may decrease the international growth rate and reduce the people´s quality of life.
Canales explained that oil prices skyrocketed due to the armed conflict between Lebanon and Israel, but the price of gasoline
Rita shuts down oil production in Gulf of Mexico
The impending strike of Hurricane Rita on the Texas coast poses as much of a risk to chemical output as it does to oil production and refining, analysts say, threatening shortages of key chemicals in coming days and weeks.
An estimated 72 percent of all U.S. production capacity for ethylene was in the strike area of Rita.
"About 72 percent of U.S. ethylene capacity is in the risk area, while 26 percent of U.S. refinery capacity is there," said an analyst .
The devastating effects of Katrina on the Gulf of Mexico also pushed natural
CentAm Energy Summit in Mexico
Central American presidents are meeting this Tuesday in Cancun, Mexico, to discuss energy plans and agree on a project to build a refinery and a 1,625-mile gas pipeline, as well as a regional power generating plant.
The project, according to the Foreign Affairs Ministry, also includes the establishment of a marketing company to purchase oil and sell gasoline in southeast Mexico, Panama and Colombia. Some $6-billion will be invested on this enterprise.
The refinery will process Mexican oil for the country and Central America and create a gas station network under the franchise of the state Mexican
Several oil and gas facilities in the Gulf of Mexico have resumed operations following Hurricane Katrina. However, an industry analyst says the full extent of damage to generating facilities is still unknown.
Jim Flanagan of IHS Energy says the story of Hurricane Katrina is still unfolding. He says there's a lack of published reports by energy companies about damage done to their offshore facilities.
"I think it has a lot to do with, number one, some of the on-shore staging areas have been pretty much devastated," said Mr. Flanagan. "So, it's difficult to get transportation to and from some
Brazil, Mexico markets fall, energy boosts Toronto
Brazilian stocks declined Friday, pulled down by a steeper-than-expected decline in U.S. industrial production, a fall in Brazilian retail sales and a growing aversion to risk among investors.
The benchmark Ibovespa index fell 0.4% to 29,772.
The announcement of a 1.3% drop in U.S. September industrial production, compared with a consensus estimate for a 0.4% decrease, dragged Brazilian share prices lower.
The stock market also had to digest a decline in Brazilian retail sales in August, down a seasonally adjusted 0.4% from July, according to data Friday from the Brazilian Census Bureau, or IBGE. It was
Crude Oil Is Little Changed as U.S. Gulf of Mexico Output Drops
Crude oil was little changed, rebounding from the session's lows, after a government report showed that U.S. oil production fell in the Gulf of Mexico.
Oil production was 901,726 barrels below pre-storm levels, almost 5 percent more than reported yesterday, the Minerals Management Service said in a daily report. Prices declined earlier today on an Energy Department report that showed U.S. supplies of crude oil and petroleum products declined less than expected in the wake of Hurricane Katrina.
``There are obviously still some problems out in the Gulf,''
Brazil, Mexico's Indexes Fall on U.S. Inflation: Latin Stocks
Brazil and Mexican benchmark stock indexes fell as higher-than-expected inflation in the U.S. raised concern interest rates may keep rising, reducing inflows to emerging markets.
Brazil's Bovespa index of the 57 most-traded stocks in the Sao Paulo stock exchange fell 514.20, or 1.7, to 29,727.41 at 2:13 p.m. New York time. The drop was led by state-controlled oil company Petroleo Brasileiro SA. In Mexico, the Bolsa fell 158.93, or 1 percent, to 15,123.80, led by America Movil, Latin America's largest wireless telephone company.
``Inflation there raises fears of lower growth and
