The interplay of domestic and global forces
Don't be misled by the headline. This article is about a lot more than economics, and Elizabeth Malkin does a good job of describing the political complexity.Mexico, an Oil Producer, Hasn’t Benefited From Soaring Prices
"Mexico is the world’s sixth-largest oil producer, and the steady climb in the price of oil has reached record highs. The soaring prices should have generated $3 billion above budget estimates for the state oil monopoly, Pemex. But now the government says that windfall just is not there."The recent announcement by the finance ministry angered opposition politicians, who declared that government technocrats were manipulating the numbers.
"The spat over the missing windfall is about more than government largess, although that is part of the issue. Under Mexican law, a percentage of extra money from high oil prices is distributed to state governors to be spent on public works. (Opposition parties govern most of Mexico’s 31 states as well as Mexico City.)
"But the stakes are even bigger. Congress is in the middle of two months of public debate over a proposal to overhaul Petróleos Mexicanos, the oil company’s formal name...
"[M]any outside analysts accept the government’s explanation for the vanished windfall. 'The numbers are quite clear,' said Carlos Elizondo, a political analyst at CIDE, a Mexico City research organization.
"Though oil prices are up, Mexico is exporting less crude oil and importing more refined gasoline, which it does not have the capacity to refine itself, raising the cost of subsidizing Mexico’s below-market gasoline prices...
"Each year, the Mexican congress projects how much the government will earn from oil by estimating the price Pemex will get for each barrel, how much it will produce and how much it will export. The windfall is calculated based in part on what Pemex earns over that estimate.
"In the first quarter, the price for Mexican oil averaged 40 percent more than the budget’s estimate — a jump that should have delivered an extra $3 billion to the treasury. But declining production meant that Pemex exported almost 12 percent less crude than Congress estimated when it passed the budget last year.
"But along with declining production and exports, the cost of gasoline imports spiked 39 percent due to higher volumes and prices than legislators had estimated. A strong peso hurt too, because Mexico received less in peso terms for its dollar-denominated oil sales..."
See also:
- Nationalism and legitimacy
- Protest in Mexican congress
- The power of national symbols
- Celebrations, protests, and quesitons
Labels: economics, globalization, Mexico, politics
posted by Ken Wedding @ 7:47 AM
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