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Washington D.C.– This Tuesday at the White House, President of Mexico Lopez Obrador (AMLO as he is known) met with President Biden. AMLO announced to Biden that Mexico will be sending 72% of its oil production to US refineries, to help the United Stares recover from its economic inflation and gas price hikes.
Reuters reported on July 8th, that U. S. crude oil imports from Mexico surged to the highest level in more than eight years last week, as swelling inventories and a desire for Mexico’s new largest refinery –called Dos Bocas located in the state of Tabasco and inaugurated in late June– led Mexico to offload more barrels. U.S. buyers boosted their purchases of Mexican oil by 0.834 mbd to about 1.3 million barrels a day in the week of July 3, the largest purchase since February 2012, according to the EIA. The surge helped send US net imports last week to the highest since August 2019.
AMLO told Biden during his visit to the White House that Mexico “will continue to allow Americans who live in border states to cross to Mexico to buy [cheap subsidized] Mexican gasoline during the U.S. gas crisis“.
“In the mid time until gas prices in the U.S. goes down. We have decided it was necessary for us to allow Americans who live at U.S. border states to cross to Mexico to fill in their gas tanks on gas stations in Mexican territory. AMLO told Biden.
This is possible because since the start of high US gas prices, thousands of Americans are crossing to Mexico every day to fill up their vehicles‘ tanks, at gas stations in Mexico which sell gas at prices as low as $1.50 dollars per gallon –due to Mexican government gas subsidies aka Mexican tax payers.
AMLO reminded Biden that gas prices in the U.S. are currently as high as $8 dollars per gallon and that’s the reason why Americans are fleeing to Mexico to fill up their cars on the Mexican side.
“Right now a lot of Americans are crossing to Mexico to buy gasoline. However we can increase gas production to double at our border [to help Americans with more gas] that will be considered a support [from us to the U.S.]… Right now a gallon of gasoline in the U.S. is $4.78, and in our territory $3.12 [at the border and $1.50 in the center region of Mexico), AMLO told Biden.
Mexico does not suffer a hike in gas price because before the pandemic it implemented several polices to keep gas prices low for Mexican consumers.
Some of the polices Mexico has implemented aside from gas subsidies that do not come from tax payers, neither the government. Instead, Mexico uses its public gas company PEMEX in three ways:
a) To take a small part of its profit and use it to pay gas stations a percentage of the gas they sell to then provide lower gas prices,
b) PEMEX to generate competition within their domesticmarket in order to offer consumers low gas prices. Therefore, avoiding monopolies which then can create price gouging or be tempted to use consumer gas for market speculation which in tern could lead to abuses. Texas is one example of gas gouging and market speculation abuses. Last winter they not only had a blackout that killed a dozen people, but consumers ended up paying bills of up to $5K a month.
c) Another policy Mexico’s consumer department implemented is to monitor prices at gas stations. The government created an app that reports to consumers what station has increased gas prices arbitrarily. The app then offers consumers a map of gas stations who have better prices.
Lastly, a stroke of genius from AMLO was to have Mexico purchase a huge oil refinery in Deer Park, Texas, which for decades Mexico was half-owner, along with Shell.
Two years ago during Biden’s green energy campaign to push fossil fuel energy companies to sell some of their assets in order to transition to clean energy, Mexico negotiated a deal to acquire one of the largest refineries in the U.S.
PEMEX bought 100% ownership of the Deer Park refinery in Texas, allowing Mexico to increase its gasoline output production. Most of that gas is now been sold to the U.S. for domestic consumption.
Mexico’s helping the U.S. with gas doesn’t end there. During his White House meeting AMLO personallly hanked Biden for approving the purchase of the Deer Park refinery. AMLO told President Biden, that ”thanks to that purchase, Mexico can now increase its gas production twice as much to provide gasoline –with the use of the PEMEX pipelines– to 3 million americans in the states of Texas, New Mexico, Arizona, Florida and California.”
“I want to take this opportunity to personally thank you for aproving the sale of Dear Park refinary in Texas to Mexico! We can now doubled gas production and have extra to export to the U.S…. President Biden, we put at your disposal over 1000 miles of gas pipelines to send gasoline to New Mexico, Texas, Arizona, and California at a lower price [than miltinational companies like BP, Chevro or Exxon Movil offer] ” AMLO
Biden literately opened his eyes in surprise to realize that letting go Dear Park has now helped Mexico to increase its power position in the oil market. News outlets’ critics think this represents a humiliation to the U.S. by allowing Mexico achieve a more balanced energy policy that provides Mexicans with fairer gas prices, something Americans can’t get unless they cross the border, which they are doing en mass.
Currently, Mexico is not only better positioned than the United States in terms of domestic gas prices. Now Mexico has the luxury to provide affordable gas to the United States during its sanction war with Russia.
At the end, the unthinkable has happened, after 100 years of U.S. companies suppressing Mexicos’s oil development, ironically Mexico is now rescuing the United States during its inflation and gasoline crisis. A crisis critics say was created by the wrong policies during the pandemic, untimely green policy push right after the pandemic, and the unlimited printing of money ($25 trillion dollars) by the fed in the last 3 years.