Thread: Mexico plans domestic relief for high fuel prices

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Mexico plans domestic relief for high fuel prices
Sun Sep 4, 2005 9:48 PM ET



MEXICO CITY, Sept 4 (Reuters) - Mexico's President Vicente Fox said on Sunday he will quickly take measures to reduce the impact that the Hurricane Katrina disaster has on energy prices for Mexican consumers.

State-owned oil monopoly Pemex faces soaring costs for importing U.S. gasoline into Mexico, where refining capacity is too small to meet national fuel needs.

"This week, I will announce a decree to minimize the impact of this unfortunate disaster in the United States on Mexican families and national industry," Fox said, speaking in the northern city of Monterrey.

Pemex so far has not said how much it will be affected by higher prices and scant supply of U.S. gasoline, on which Mexico depends for a quarter of its automobile fuel needs.

Mexico imported 138,200 barrels per day of gasoline in July, as well as diesel and other fuels like natural gas.

The blow to Mexican oil exports has been minor, Pemex has said, with only one of the refineries it supplies in hurricane-ravaged Louisiana cancelling supplies of Mexican Maya crude.

http://www.dfw.com/mld/dfw/business/12566966.htm

Posted on Mon, Sep. 05, 2005

Mexican leader plans energy price decree


Associated Press

MEXICO CITY - Mexican President Vicente Fox said he plans to issue a decree this week to counter the effects of Hurricane Katrina on domestic energy prices and supplies.

In a speech Sunday in the northern city of Monterrey, Fox said the problems in Louisiana and Alabama following the devastating passage last week of Hurricane Katrina not only threaten to cause significant increases in energy prices, but also could affect supplies to Mexico, which imports about a fifth of its gasoline and natural gas from the U.S.

"This coming week I will publish a decree to minimize the impact of this unfortunate disaster in the U.S. on Mexican families and national industry," Fox said. He gave no details of the plan.

Some U.S. refineries along the Gulf coast have started to resume operations, but four of them are likely to be out for weeks or even months, affecting 5 percent of U.S. refining capacity.

The storm and its aftereffects have led to huge spikes in gasoline prices across the U.S.

The higher prices could create a problem for Mexican state oil monopoly Petroleos Mexicanos, or Pemex, which imported an average of 157,000 barrels a day of gasoline in the first seven months of this year to complement its own output of 463,000 barrels a day.

Regular unleaded gasoline in Mexico currently costs the equivalent of about $2.25 a gallon.

Mexican domestic prices are controlled by the federal government with a special tax that fluctuates with the cost of producing gasoline. When crude oil prices rise, the tax falls, and when crude is cheap, the tax increases as a portion of the overall retail price.

According to some recent news media reports, with crude oil prices at record levels and U.S. gasoline prices soaring, Pemex is currently subsidizing domestic prices.

Pemex is the world's third-largest oil-producing company, with crude output just under 3.4 million barrels a day and exports around 1.8 million barrels a day.

Pemex said last week that Chevron Corp. asked it to defer shipments of 3.5 million barrels of crude because of a refinery outage at Pascagoula, Mississippi. Pemex said it expects to place the crude elsewhere.