Tag Archive for: mexican economy

Competitive fuel market is still some years off, analysts say

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Mexico News Daily / Mileno / June 25

 

Time, more investment required before gas prices will drop

It will take another two to five years to attain a truly competitive fuel market with lower gasoline prices for motorists, according to industry specialists.

The federal government’s 2013 energy reform opened up Mexico’s retail fuel market to foreign and private companies and there are now more than 2,000 gas stations that operate under a brand other than the state-owned Pemex.

But the increased competition hasn’t translated into cheaper fuel prices as had been expected.

“It was thought that it would be faster but that’s not the case,” said Rodrigo Favela, a consultant and fuel market analyst.

Favela told the newspaper Milenio that based on experiences in other countries, creating a competitive market takes time.

In addition, greater competition in the retail fuel market is not enough on its own to generate lower fuel prices, according to Mexico’s central bank.

In its regional economies report for the last quarter of 2017, the Bank of México said greater investment is needed in the entire gasoline supply chain from the refinery to the gas station in order for prices to drop.

Sebastián Figueroa, CEO of energy operator FullGas, told Milenio that gas stations in the north of the country could start competing on price within one to two years.

He cited proximity to the United States, the presence of existing pipelines, greater ease with which fuel can be imported and lower logistics costs as factors that will likely see fuel prices drop more quickly there than in other parts of the country.

In central states, Figueroa predicted that it would be another three to four years before competitiveness among gas stations increases due to the need for more infrastructure while in the southeast of Mexico, it could take up to five years or more.

In the latter region, the development of the new infrastructure that is needed — such as pipelines —is more complicated because of geological factors, he said.

Considering that fuel prices have actually risen since Mexico’s previously monopolized fuel market opened up, Milenio asked the president of the Senate’s energy committee whether energy reform should be considered a failure.

Salvador Vega Casillas, of the opposition National Action Party (PAN), rejected that suggestion but said it was a mistake to liberalize fuel prices at a time when the value of the US dollar was high against the peso. Gasoline prices were fully deregulated by November 30 last year.

However, Figueroa said that if the government had waited any longer to free prices, more problems could have been created for the sector because a subsidized model is not sustainable.

He maintained that the reform is a positive for Mexico, charging that having only one participant in the downstream sector led to inefficiency whereas competition forces gas stations to offer better deals to motorists.

Federal Energy Secretary Pedro Joaquín Coldwell has also contended that an open and competitive market is the best way to achieve gasoline prices that are accessible to all Mexicans.

Favela explained that there are three main factors that determine the price of petroleum at the pump: international crude oil prices, the prevailing exchange rate and logistics costs.

In order to generate a more competitive market, he argued, all petroleum companies should have non-discriminatory access to the nation’s oil terminals and ports.

Despite opening up the domestic fuel market to new players, the majority of Mexico’s petroleum infrastructure is still controlled by the state oil company Pemex.

The average price of regular — or Magna — gasoline has risen 17% this year, according to the consultancy PETROIntelligence, from 16.24 pesos per liter at the beginning of January to 19 pesos. Prices were as high as 19.11 pesos on Friday in Guadalajara.

 

Mexico News Daily / Mileno / June 25

 

Mexico’s central bank chief sees risk from protectionism to economy: paper

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Reuters / Reuters Staff / june 4

 

MEXICO CITY (Reuters) – Protectionist trade measures could hit Mexican economic growth and inflation, Mexico’s central bank governor said in comments published by newspaper Reforma on Monday, in the wake of U.S. import tariffs on Mexico, Canada and the European Union.

 

Mexico now faces new tariffs of 25 percent on steel and 10 percent on aluminum after temporary exemptions expired, prompting Latin America’s second biggest economy to slap tariffs on U.S. products such as pork and cheeses.

 

“It’s an element of risk, the fact that protectionist measures are beginning to spread and that it generates a less favorable environment for international trade,” Mexico Central Bank Governor Alejandro Diaz de Leon said.

“The fact of this risk – which is already materializing in some actions against international trade – is an element of worry due to its influence on the side of growth and on the side of inflation,” he added.

The flurry of tariff hikes come as talks drag on among Mexico, Canada and the United States to overhaul the North American Free Trade Agreement (NAFTA).

 

Reuters / Reuters Staff / june 4

 

 

Mexico Economy Minister: NAFTA Must Remain Trilateral Accord

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FROM: Voa News / Reuters / 3 de marzo de 2018

MEXICO CITY — Mexico’s Economy Minister Ildefonso Guajardo on Tuesday rejected making a bilateral trade treaty with the United States, saying the North American Free Trade Agreement, which is currently being renegotiated, must remain a three-country accord.

On Monday, U.S. Trade Representative Robert Lighthizer said time to rework the deal was running “very short” and again raised the possibility of the United States pursuing bilateral deals with its partners, while stressing that Washington would prefer a three-way agreement.

NAFTA “has to be a trilateral accord, given the conditions of integration in North America,” Guajardo said in an interview with the Televisa network on Tuesday. “It must be that way.”

Lighthizer said on Monday that Mexico’s presidential election and the looming expiry of a congressional negotiating authorization in July puts the onus on the United States, Mexico and Canada to come up with a plan soon.

The latest round of talks have been clouded, however, by U.S. President Donald Trump’s plans to launch metals tariffs. On Monday, Trump tweeted that “tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed.”

Guajardo said on Tuesday that if the U.S. government were to push ahead with metals tariffs that included Mexico, the country would be forced to respond with politically targeted tit-for-tat responses.

“There’s a list (of U.S. products) that we are analyzing internally, but we won’t make it public, we’re going to wait,” Guajardo said.

He also said that in a meeting in Washington last week, in which he met Commerce Secretary Wilbur Ross, he told the U.S. official that Mexico should not be included in the proposed tariffs.

“We’re allies in national security … our industries are highly integrated, we buy more (U.S.) steel than we sell, and so there’s no point in shooting oneself in the foot,” he said.

 

 

FROM: Voa News / Reuters / 3 de marzo de 2018

Mexico’s finance minister isn’t worried about a ‘plan B’ for NAFTA

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FROM: CNBC / Natasha Turak / 25 de Enero de 2018

 

Mexico’s Finance Minister Jose Antonio Anaya appeared confident in the future of the North American Free Trade Agreement (NAFTA), telling CNBC Wednesday that dialogue between the trade partners was ongoing.

“Our central scenario is that this will go to a good deal,” Anaya said while at the World Economic Forum at Davos. “We believe trade is good for all three nations, and that’s what we’re hoping for.”

Asked about a potential “plan B” if the U.S. chooses to terminate the deal, Anaya stuck to a positive note, avoiding any doomsday scenarios.

Anaya’s Davos appearance coincides with the sixth and penultimate round of NAFTA negotiations currently underway in Montreal, Canada.

The 24-year-old agreement is now in jeopardy unless Canada and Mexico satisfy U.S. demands for changes to the deal. President Donald Trump maligned NAFTA during his presidential campaign, claiming it hurt American jobs, and threatened to abandon it altogether if his administration’s needs are not met.

NAFTA, which eliminated tariffs across territory encompassing 450 million people, has been a lifeline for Mexican jobs. Asked about the likelihood of a U.S. pullout, Anaya was vague.

“It’s hard to say, but … What we can say about the NAFTA negotiations is that there’s dialogue and there’s a process,” he said. Anaya took up the ministerial position in late 2017, after two years at the helm of state-owned oil company Pemex.

He echoed Canadian Finance Minister Bill Morneau, who spoke to CNBC earlier in the week, expressing confidence in the agreement’s preservation.

“Let us work on plan A,” Anaya said. “Plan A is that NAFTA has been good for Mexico, good for the United States, and good for Canada. That’s the way we see it, and we’re going to continue to work on a new version that is also good for all of us.”

“We want to keep it as a trilateral deal, and we’ve always worked on that front,” the minister continued. “The dialogue is going on, and that’s what we should bet on.”

Since the deal’s signing in 1994, U.S. foreign direct investment (FDI) into Mexico has increased from $15 billion to more than $100 billion, and regional trade has expanded from $290 billion to $1.1 trillion. Some 14 million American jobs depend on trade with Mexico and Canada, according to the U.S. Chamber of Commerce.

Disagreements persist over the negative impact of the trade pact on the American economy. Washington D.C.-based think tank Public Citizen has reported the deal led to the loss of up to 1 million U.S. jobs and a $181 billion trade deficit with Mexico and Canada.

The bulk of U.S. jobs lost were in former manufacturing hubs like Michigan and Texas, states that went to Trump in the 2016 election.

 

 

FROM: CNBC / Natasha Turak / 25 de Enero de 2018