Thursday, March 19, 2015

Today's Mexico City Headlines: What? Oil again? The Patrimony of the Nation? The Symbol of Sovereignty? That is so . . . 1938.

Yesterday was the 77th anniversary of Mexico’s expropriation of its oil industry that foreign companies had pretty much converted into their own. Every school child can cite the date.        
    The take-back was a key shift in the nation’s economic and political trajectory, and has since served, for better or worse, as the central symbol of the reigning national obsession that sends even the most cosmopolitan into genuflection — sovereignty.
    Today, the notion that oil is above all a symbol of sovereignty is an abstraction that hinders sound policy. But it’s such a powerful abstraction that it’s blinded otherwise rational leaders of all political persuasions to the obvious — that things have changed since 1938.
    At the risk of coming off as condescending, let’s for the record mention some of those changes. Oil is 1) fueling dangerous climate change, 2) distracting policymakers from developing sustainable energy sources that Mexico is even more blessed with than petroleum, and 3) running out.
    These things are never mentioned — never — during ceremonies honoring the Patrimony of the Nation. Yesterday was no exception. All papers lead with an oil story, but they’re not all the same.
    El Universal and Excelsior both go with the president’s speech, using similar headlines. Excelsior: “Pemex must be protected: Peña.” El Universal: “EPN: Urgent to shield Pemex from crime.”
    The threat to Pemex, the para-state oil company, is not so much terrorism as organized crime, for whom the Pemex lines are easy pickings. Syphoned-off gasoline is a lucrative business. Nearly $24 billion pesos worth was sold on the black market in 2011 and $33.2 billion pesos in 2012. Estimates for 2014 are coming in around $2 billion dollars.
    When the papers cover a major presidential address, they don’t bother much with context or exegesis. What we get are the words. Here the president's take-home message comes in two parts:
    1. The Army has been doing a fantastic job protecting Pemex facilities.
    2. We need to do a much better job of protecting Pemex facilities.
    To accomplish the latter, Congress needs to pass legislation called “The Law to Prevent and Sanction Criminal Acts Committed Against Hydrocarbon Materials.” Assuming that stealing gasoline from Pemex pipelines was already illegal, the new law would presumably empower authorities in new ways to help with a crack down. We await that information.
    Reforma gives its lead headline not to the president but to Carlos Romero Deschamps, the Pemex union leader. He echoes the call for protection — but of jobs, not petroleum. Here’s the contentious headline: “Romero issues challenge: There will be no cuts.”
    “Challenge” is a well-chosen word. In announcing drastic spending cuts earlier this year in response to reduced revenue from low oil prices, the Peña Nieto administration was up-front about  the bulk of those cuts coming out of Pemex. That means eliminating jobs. Deschamps is saying he’s not going to accept that. Could get uncomfortable.
    The date on La Jornada’s front page reads March 19, but it could have been Groundhog’s Day. It seems not a day goes by without at least one of the papers giving us a version of today’s lead Jornada head: “Oil recovery could take years: Videgaray.”
    Finance Secretary Luis Videgaray, speaking at an event sponsored by LatinFinance magazine, is reminding us yet again that the rock-bottom price of international oil is not a transitory phenomenon. Implication: we better get used to it.
    That means more cuts in 2016 than in 2015, when insurance coverage is softening the blow somewhat. What he’s saying, again, is that hard times have come to Mexico and we’re all going to have to suck it up. Perhaps he should have a chat with Sr. Romero Deschamps.

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