The buzz on Pemex

Tequila: Can you provide a link to that information? To allow competition at the retail level requires a change in the constitution. This President has enough problems without upsetting the populous.

Moisheh

Mexico wanderer: The chisme in the street is only exceeded by that in the Trailer Parks.

If you are Mexicano you know the following words

"ES NUESTO EL PETROLEO"

Those words are SACRED. Mexico CAN NOT GET more ULSD. There is so much pinch on supplies Petroleos Mexicanos must import a lot of ULSD for Baja California (north state) and the narrow border strip, from JAPAN. It arrives at the tanker dock offshore from Rosarito beach.

CHISME is a national pastime. If you ever listened in to the women washing clothes down at the river, or drunks shouting at each other over the 120 db jukebox you would understand this point.

The politicos are robbing so much profits from the coffers of PEMEX there is not enough money left to upgrade refineries with sulfur plants and treaters to make ULSD. Indeed the Salina Cruz and Salamanca refinaciones are progressing slowly as is, installing plants to manufacture ULSG Premium gasoline so it does not have to be imported from the Deer Park refinery in Houston.

THE PETROLEUM IS OURS, trumps gossip, hyperbole, hearsay, and wishful thinking...

Tequila . I heard the same story. Apparantly Esso competing with Pemex but still govt controlled. Go figure eh. Anyway, I am glad that the poor Nationals are hopefully not going to have to pay more. Less would be better. What happens when crude hits 50 bucks a barrel? On the National last night, pump prices well below a looney on the prairies and the AB economy is going to take a hit. and less pesos to our loonie

I am certainly no authority and don't know all of the details about a lot of this. I read a lot and find articles that lead to other articles. I try to find information.

The other day OPEC had a big meeting and the Saudis say they are going to keep production up. With high production there is a glut and prices go down. The Saudis do not care if prices drop because their oil is relatively cheap - easy to get out of the ground - and cheap to refine.

The big oil "boom" in the US is mostly all deep shale that is very costly to get out of the ground and not cheap to refine. So the price per barrel has to be high to make it worth drilling for this oil. Now that the price has dropped the US driller in ND and elsewhere cannot afford to drill. Some rigs have already been idled and parked. Small drillers have to borrow money for rigs and cannot pay for them when the barrel price is low.

With the big "boom" in the US there was a big increase in production so oil production levels reached record highs. This along with OPEC production resulted in a glut which drove prices down.

I am not totally clear on what is going to happen in Mexico when they say they are going to let other oil companies back into Mexico. It is my understanding that they are only going to allow the companies that drill back in - to drill new wells. They may allow refineries or they may partner with oil companies to build new refineries. I don't think there will be gas stations competing with Pemex. Mexico does not have the technology or the equipment to get the deep oil and shale oil out of the ground so they are going to have to let those who do have the technology and equipment in to drill for the oil that is harder to get. This will not be cheap oil.

I have read some about where the new oil fields in Mexico will be and we have seen Haliburton and Schlumberger equipment in Mexico which probably means they have been doing the exploration and mapping of where the oil is.

I have not heard what the unions in Mexico have to say about letting others in. The unions have always been opposed and they have been strong. Any deals to allow foreigners to profit in Mexico is going to have to be agreeable to the unions.

In many countries around the world the price at the pump is high due to taxes. Though we think the price in the US is high it is actually relatively low and taxes are relatively low compared with much of the rest of the world. US infrastructure is crumbling because no one wants to pay taxes that would go toward fixing roads and bridges. Oil prices are high due to the high cost of getting expensive oil out of the ground and refined - not to mention piped to the refinery. Taxes will have to be raised to pay for 60,000 crumbling bridges and roads that can't take much more before they are no longer driveable.

SUPPLY & DEMAND . . When prices are high people find ways to cut back on how much they use - economical cars - car pools - take the bus - fewer trips to the grocery store. When people cut back the supply goes up and there is a glut. Prices drop. People start to drive more again and use more energy. Prices go up. The cycle continues.

Quite a few years ago I was in Venezuela which is an OPEC country. Gasoline at the pump was 17 cents per gallon - based on conversion rate. Today gasoline is still about 17 cents a gallon in Venezuela because the Gov't owns the oil. They sell to other countries at OPEC prices but keep prices low for their people because Gov't owned oil pays the bills - when sold to other countries. The Gov't in Mexico also owns the oil and uses whatever profits to pay the Gov't bills - I have heard about 45% of the budget is paid for by Pemex money. Is this fact?

In the US there are people who believe drilling for oil in ND is going to bring the price at the pump down. It will not. It costs what it costs to get that oil out of the ground. It is not cheap. They have known that oil was there for over 50 years but could not get to it because it is too expensive. Now they can drill down 2 miles and then turn the drill horizontal and drill further and further. Then they pump "brine" (salt water and chemicals) down the well and "fract" to open the veins in the rock. Then they heat the rock to get the oil out of the rock. This is expensive. It will not lower the price at the pump. What lower the price at the pump is increased production by OPEC.

Books could be written about all of this - book have been written. Speculators on commodity markets all over the world try to figure out what will happen next. I am not a speculator. But I do think all indications are that we will not be seeing what I would call cheap oil again. Opening up drilling to foreigners in Mexico should increase production in Mexico which could lower prices at the pump in Mexico. Only time will tell???

Here is a great site by MexicoMike, http://www.mexicomike.com/database/runner/public/mx_fuel_prices_list.php. He keeps it current monthly with all conversions.

rocmoc n AZ/Mexico