ustxtxb_obs_1998_04_24_50_00022-00000_000.pdf

John Spragens, Jr LAS AMERICAS Mexico’s Gulf War BY JOHN ROSS Mexico City The sixtieth birthday party of Mexico’s nationalized petroleum industry on March 18 was a cheerless affair. At the official ceremony in New Pemex City, on the Chiapas-Tabasco state line , President Ernesto Zedillo had only bad news to deliver. Oil prices had tumbled to their lowest level in a dozen years and Mexico was feeling the pain. While international benchmarks like West Texas Sweet Crude and Brent shade over $8 per barrel. Zedillo assured the industry honchos celebrating the birthday of that the price slash would not deter growth, then a few days later, as declining oil prices shaved $3 billion off projected 1998 government revenues, announced a second round of budget cuts. Even the site of the PEMEX fiesta was a problem. Because of tensions in Chiapas, the military had ordered the ceremony moved to a refinery in Salina Cruz, Oaxaca. At the last minute, the event was moved back to New Pemex City. The changes cost PEMEX $700,000, mostly for , presidential security or so reported the national daily Reforma. Declining oil prices evoke bitter memories for Mexicans. The 1981-82 crash put the nation in default, when President Jose Lopez Portillo could not pay short-term loans fast enough. And the 1985-86 price plunge resulted in 160-percent inflation. In both cases, the Mexican government tried to blame its problems on “external” circumstances over which it had no control. The current crisis is no exception. In the government’s analysis, the fall in prices is the result of over-production, global warming that decreased winter demand, and the collapse of markets in Asia. This “external’ . conjunction of events was further aggravated by the U.S. failure to bomb Iraq, as a Clinton offensive against Saddam Hussein presumably would have knocked a potentially dangerous player out of the big-oil game. The Zedillo administration continues to identify such “external” pressures as the source of its current oil woes, although they are a predictable consequence of Mexico’s becoming a player in the global economy. And the Zedillo government shares in the blame for the world-wide oil glut, having upped export production by 450,000 barrels in 1997. In mid-March, Mexico, Venezuela, and Saudi Arabia announced small cuts in daily production, in a ploy intended to shame OPEC into cutting world production by a million barrels a day. Mexico’s contribution to the cutbacks totaled 100,000 barrels a day, considerably less than the near halfmillion-barrel increase in its export production last year. Despite the much-ballyhooed sacrifice, oil prices are still down. Although PEMEX. accounts for a declining percentage of Mexico’s exports \(10-20 sponsible for forty percent of all federal revenues. Each one-dollar drop in the price of a barrel of oil translates to $700 million lost to the treasury. Falling oil prices have also increased the deficit to a five-year high, while pushing growth rates down to below 5 percent. And as PEMEX contributions to federal coffers cover the tab for higher education and the salaries of teachers and doctors, those at the bottom of the economy will pay double for the oil-price crash as services and government job programs dry up. Yet recovery for PEMEX is a long way off. With 60 percent of its income handed over to the Mexican government to pay for programs, debt, and payrolls, the oil company has little spare change to sink into exploration, and no new fields have been 22 THE TEXAS OBSERVER APRIL 24, 1998