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Mexico’s Gas Crisis

By Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.

Mexico gasMexicans using their own cars or other motor vehicles are having a tough time filling up their gas tanks. There are today usually huge lines at gas stations due to a supply crisis, although purchasing restrictions have not been introduced yet (although this might change soon). The supply crisis has been caused by the new Mexican President’s order to shut several petroleum pipelines to prevent theft. It has been quite common in Mexico for thieves to tap into these pipelines which supply gas stations and to siphon off gasoline for sale on the black market. Mexico’s state oil company, Petróleos Mexcianos (PEMEX), has estimated that $3 billion worth of gasoline is lost to this theft every year.

While the Presidency maintains that there is no true shortage of supply (this is disputed in some quarters), the alternative method of distribution is not proving robust enough to cope with picking up the slack, seemingly due to bottlenecks at the distribution supply centers which need to process a greater number of trucks to make the deliveries.

Long lines at gas stations are becoming the new normal, and authorities in some localities are close to implementing new regulations which would allow vehicle owners to fill up their tanks on one day of the week only. Similar measures were used in the U.S.A. during the 1970s oil crisis, with odd and even numbered license plates being allowed access on alternate days. One day a week would be considerably more drastic and inconvenient for drivers, but most private users could probably get by even with such a limited access to purchases.

This crisis doesn’t seem to have had any impact on the Mexican Peso though: it has continued to strengthen steadily against the U.S. Dollar over the past four weeks. It is true the U.S. Dollar has been falling anyway during this period, but even taking that into account shows nothing exceptional in the Peso’s movement.

Adam Lemon
About Adam Lemon

Adam Lemon began his role at DailyForex in 2013 when he was brought in as an in-house Chief Analyst. Adam trades Forex, stocks and other instruments in his own account. Adam believes that it is very possible for retail traders/investors to secure a positive return over time provided they limit their risks, follow trends, and persevere through short-term losing streaks – provided only reputable brokerages are used. He has previously worked within financial markets over a 12-year period, including 6 years with Merrill Lynch.

 

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