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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'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't exactly help Mexico'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 pieces by @LourdesMelgar @jermartinioa @John_IPDLatAm @MexicoInstitute
with 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'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's cut? I am intrigued to see how that would actually happen!
