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Open thread. @Edo_Granpa asked me to opine on Mx & OPEC+. Here goes:
1. We all know by now that the government is blindly committed to increasing production - nothing (not COVID-19, nor Pemex downgrades, nor endless expert advice) will change that
1. We all know by now that the government is blindly committed to increasing production - nothing (not COVID-19, nor Pemex downgrades, nor endless expert advice) will change that
2. For someone born & raised in Tabasco, AMLO knows surprisingly little about the way in which oil markets work. Legacy of Mexico& #39;s extended oil nationalism
3. The failure to grasp an opportunity to stabilise oil prices at a time when it is costing more to pump much Mexican oil than the market price, is mind-boggling
4. At a time of such low oil prices it actually makes economic sense to import crude for domestic refining rather than increase production; why pump oil at a loss?
5. Of course AMLOs logic has never been economic - political concerns always take priority in his calculations. This has been proven time and time again during his administration
6. This crisis is proving that there is a desperate need for storage capacity in Mexico - both oil & refined product
7. If AMLO wants to create a meaningful economic stimulus package at some point, he should include energy infrastructure in it - storage, pipelines, transmission, even (AMLO forbid) wind farms and solar plants
8. Will there be retaliation from other oil producers? Not immediately perhaps but it doesn& #39;t exactly help Mexico& #39;s standing in the world. Does AMLO care? Not a jot
9. What about consumers? Private oil companies? Pemex itself? Energy policy in general? See our great resource https://www.wilsoncenter.org/article/mexico-age-low-oil-prices
with">https://www.wilsoncenter.org/article/m... pieces by @LourdesMelgar @jermartinioa @John_IPDLatAm @MexicoInstitute
with">https://www.wilsoncenter.org/article/m... pieces by @LourdesMelgar @jermartinioa @John_IPDLatAm @MexicoInstitute
10. Lastly, is there a chance that AMLO is right and that Mexico can essentially free ride on other nation& #39;s cuts. Yes, but there is a chance the other nations wont sustain their cuts and Mexico will pay in terms of reputation and trust
11. One more thing: AMLO has just said that US will be responsible for 250k barrels of Mexico& #39;s cut? I am intrigued to see how that would actually happen!
