New Year, New Energy Problems for Mexico Businesses
We are not even a few week into the New Year and Mexico is experiencing problems in the supply of gasoline and other refined products. The reason for these problems is the decision by the new Government to shut down the oil pipelines and refineries owned and operated by state-owned giant PEMEX to prevent the widespread theft of gasoline and diesel.
Unfortunately, the Government decided to take a radical approach to crack down on oil thefts across the country, and it has caused significant ramifications, as shown in the picture below. Currently, gasoline, diesel, and other fuels are being transported by road, thus increasing costs and delivery times. Because of this approach, the supply issues, which started as a very localized problem, has now spread to 7 of the 32 states in Mexico and has also begun to affect some airports.
Clearly, the strategies applied by the government has created new business burdens, since it comes on the heels of a year filled with volatile energy prices that saw electricity tariffs soar by as much as 120%. Some Industrial organizations have estimated that the average weekly losses due to the problems with the supply of gasoline in 2019 to be an estimated USD $66m by each state due to the shortages in supply.
We would love to paint a better picture for the start of 2019, however, it could get worse, since there is no indication of how long the Government will maintain this strategy and given that, the shutdown of refineries has translated into an increase in the number of tankers waiting offshore to download their cargo. We monitor the energy market every day, so check back in for new energy insights to drive your business strategies.