Monday, April 8, 2019

Mexican Fuel - Pemex Is Dying

I've always said, the government has no business in business.  Pemex is a case study in itself.  It was nationalized in 1938 and the only thing that made it viable in its heyday was the fact that oil prices are higher than they are now.   Pemex has been the country`s "caja chica" or petty cash and we could draw from it whenever we wanted.

I was here in 1984 when the major collapse happened, Lopez Portillo had run the country into the ground, Pemex was dead then and is dead now.  What has changed since then to make it such a white elephant?

We recently discovered that the Mexican general who had been assigned to Pemex to maintain the security of its pipelines had himself become a "huachicolero", or someone who steals fuel from Pemex pipelines.  Oh, he had everyone involved and they were forced to take orders.  He made millions off of "ordeñando" or milking the pipelines.

The white elephant, unionized, abused, robbed and left to rot at the expense of those, such as Deschamps, who still runs the company and recently refurbished a home in Acapulco at a cost of $12 million dollars, have been robbing the company blind and this goes all the way back to the 1940s.  Cases as recent as the 80s, 90s, and into the 21st century show that crude, gasoline and other byproducts had been sold to Texan oil companies and many of those owners have since gone to jail.

Let me add a new twist to the situation.  As of yesterday, it was announced that Pemex had been lacing the Magna and Premium fuels with butane and sending these highly evaporative fuels to the northern states.  Doesn't make sense does it considering that the extreme heat in the north leads to evaporative conditions?  It has been reported that the recent, last 12 months, the spike in air pollution over the Monterrey Metropolitan area has been caused by this poor quality fuel.  BTW, we pay the highest average cost for fuel so that would mean that Pemex and the government since they are owners, were really sticking it to us.

Unbelievable.  As you all know, I am a staunch supporter of this wonderful country but have had just about enough of its socialist approach and that approach is slowly beginning to spread again with the new president.  Financial advisors have begun to warn us to put 30% of our savings in foreign banks.  When that happens, only after 130 days of office, it is a warning and not a scare tactic. 

At this point, it is buyer beware if you are interested in buying a home in Mexico unless of course, you are willing to take the risk and lose the investment.  

Our local station has now changed brands and no longer carries Mobil gas.  Not sure if anyone noticed that during our fuel crisis in December when our illustrious president decided to shut down pipelines leading to the explosion and deaths of 135 huachicoleros, foreign stations remained open until they had run out of fuel or were replenished by their own brand tankers.  Mobil, like others,  imports fuel from their own refineries in the U.S.

So why the butane additive in the northern states?  Mexico cannot keep up with its own demand for fuel.  The five Mexican refineries are running at 68% capacity or less and all the money the president wishes to throw at it will not save Pemex.  Why is he so adimant to do so?  He is from one of the largest oil producing states in Mexico, Tabasco and believes he owes it to "his people".   Well Mister Presidente, no hecha la casa por la ventana, or, don't throw the baby out with the bath water.  


  1. Interesting. Yep, the government has no business being in business.

  2. Pretty sad to see this happening, thanks for the update.