Mexico Notebook: Should PEMEX, the 'people's oil,' be privatized?

 

MEXICO CITY -- A recent edition of Reforma, one of Mexico City's largest-circulation newspapers, had no fewer than four articles in its first four pages related to one of the the hottest news items in this nation: the proposal to privatize Mexico's national oil system, PEMEX.

 

The issue will come to a vote by the people Sunday.

 

A bumper sticker on the highway exclaims, "No a la privitacion!" ["No to privatization."] A flyer on a pole in southern Mexico implores the people to vote and "Defendamos el petroleo" ["Defend our oil"].

 

This nation, which nationalized oil to wrest control of Mexico's natural resource away from American companies in the late 1930s, is now considering privatizing because, it says,  it needs investment to further exploration, most notably in the Gulf of Mexico. 

 

A pro-privitization ad on television features a professional Mexican in casual dress explaining that PEMEX's infrastructure has been ignored for about 30 years. The country should have been making improvements every year, he says in a knowing tone, then adds that it hasn't, hence the need to do so much at the current time.

 

How the vote will go is anybody's guess.

 

 Despite high oil prices, Mexico hasn't seen the windfall one would expect; in fact, money has gone missing.

 

Currently the Mexican Constitution prohibits foreign investment in this national resource. However, some foreign countries work as subcontractors to Petróleos Mexicanos [PEMEX], including Halliburton, fueling speculation that company might seek to step up to take it over. In fact one of the stories in Reforma was a story about PEMEX's hiring of three Texas firms to do some exploratory work in the Gulf, including Baker Hughes, Dowell-Schlumberger and Halliburton.

 

There is a lot of demagoguery in the discussion, as one Mexico City professional lamented. The oil supposedly belongs to the people, but not every Mexican benefits from its exploitation. The government subsidizes gas prices, and the lower price benefits not only those who drive, but commerce as a whole. Some point out that it does not, however, alleviate poverty or provide a royalty to residents, a la Alaska.  

 

 

Mexican billionaire and philanthropist Carlos Slim, who owns the ubiquitous Sanborn's restaurants all over Mexico, just this month dropped from richest man in the world to second richest. He remains in the world's top three on the wealth charts thanks not only to his savvy investments over several decades but to the privatization of telecommunications, of which the average Mexican is well aware. And while Slim is held in high regard, there is the cynicism that privatization will benefit a select few.

  

There's some talk the price of gasoline will go up if it's privatized. There's also talk it will go down. Certainly the average Mexican doesn't know what the outcome will be, regardless of the referendum outcome.

 

A protest was held along Mexico City's Reforma Avenue this month by citizens on bicycles and in-line skates, demanding at least a say in talks and proposals before the referendum in held. [Another protest, in June, saw hundreds of bicyclists riding the streets of Mexico City nude to protest the fact that drivers put bicyclists in mortal danger. Some of the protesters had words like "No Oil" inscribed on their backs to show that they were part of the solution. But as one Mexico City resident noted, millions have been spent on "bike trails" that are so steep no one outside the random pedestrian uses them.]

 

Meanwhile gas is cheaper in Mexico than in the United States. A recent day's 7.23 pesos a liter for Magna (regular) comes out to about $2.89 a gallon. [Premium that day was 9.03 pesos a liter, or about $3.60 a gallon.] Even when we were spending more than $40 a day at toll booths [cuotas] the first two days of a driving excursion into Mexico,  it was cheaper to drive in Mexico than in the States -- and certainly cheaper than flying into a large city and renting a car.

 

[The downside of driving: The central districts of two cities we tried to visit -- Guanajuato and Puebla -- were simply inaccessible by car; there's no parking. We'll have to return someday by bus.]

 

PEMEX also consistently offers the travelers a decent and sometimes exceptionally good bathroom, and gas stations are located at conveniently regular intervals. Attendants pump the gas, and window washing is available for a small tip [about 20 cents]. One never has to drive around looking for the cheapest price; prices are never advertised.

 

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