Saturday, August 16, 2008

I have returned...

Hi All,

Well I am back from my annual Summer travel abroad, and as has been the case for the past several years, Mexico was my primary destination. First off let me apologize to readers of pilsenprole for being very slow to update the blog over the past few months. Now that I have returned from my Summer break, one of my goals for the new year (I always think in terms of the School year rather than the calendar year) is to be more consistent with regular updates. Check back weekly and I will endeavor to have new material for you to read and respond to. AND RESPOND IS KEY!!! I talk to people fairly often who tell me the read this blog but NEVER RESPOND ONLINE! Please do. It helps to know who is reading this stuff and I crave your feed back.

It was an interesting time to be in Mexico. As gas prices have become the number one concern of many working class people in the U.S., the possible privatization of Mexico’s state oil monopoly PEMEX is the main topic of political discussion in that country. What's interesting about the perhaps coincidental (perhaps not?) timing of these two events is the fact that the economic elites in Mexico are decrying the so called "inefficiency" of their state oil company while Americans are pouring over the Northern border to purchase the cheap, stably priced Mexican gasoline. My last fill up in Mexico was at a PEMEX station in Nuevo Laredo, several miles from the border on the far side of town. I was struck as I pulled into the gas station by the long line of vehicles waiting to fill up, a sight I had not encountered any where else in the country after a month of driving around the northern third of Mexico. I quickly assessed the situation upon noticing that every vehicle in the line had U.S. plates. I talked with one of the gas station attendants and he confirmed that this was no oddity but a regular occurrence lately. Drivers from the U.S. make up a large percentage of their customers these days he said, and they have been running through fuel supplies much more quickly at the station lately. What is even more interesting is that these drivers are braving long wait times in the return to the U.S. just to buy gas in Mexico (it took us 3 hours to re-enter the U.S. at Laredo Bridge 1). But none of this should come as much of a surprise since fuel prices in Mexico are roughly $2.50 a gallon, while gas prices over the border in Texas were nearing the $4 mark. The station attendant told me that Texas drivers not only fill up their tanks at his station, but bring as many gasoline cans and free standing tanks as they can and fill those up as well.

So why the cheap gas prices in Mexico? I’m sure some economist would tell me that there are a million and one reasons why market conditions are different in Mexico (I love when these oil company execs go before the U.S. Congress every few years to explain to nervous legislators why an oil refinery fire in Alabama, unrest in the Middle East, a hurricane in China, a butterflies wings in Mongolia, and the recent passing of his late grandmother are responsible for a 25 cent over night increase in gas prices). I am equally sure they would attempt to blame the differences on gasoline taxes in the U.S. - but Mexico also taxes gas sales at about 5.5%, not much different than gas taxes in most states. Ultimately the real explanation lies in the fact that the state plays a direct role in setting gas prices in Mexico, unlike in our magically and amazingly “efficient” private oil market in the good ole USA. From my experiences there over the years and from conversations with people living in Mexico, it is clear that fuel prices are fair more stable (around 7.3 pesos a liter for the green “Magna” or non-premium gas during the month of July) and Mexicans do not have to deal with the wild price fluctuations we experience north of the border. Gas prices rarely rise more than a cent or two from month to month. The highest price we paid in July was 7.32 pesos per liter, the lowest 7.24 pesos. I think this raises serious questions about whether privatization is the miracle cure all solution to economic woes as repeated ad nauseam by every economist, politician and journalist given any credibility in the global north.

Mexico is actually a quite interesting example of the hollowness of the cult of privatization. The transfer of Telmex, the national telephone company, into private hands in the early 90’s turned the new owner, Carlos Slim, into the world’s richest man (yes richer than Bill Gates, though he may have slipped into second place this past month) and made billions for foreign investors. But it did little for Telmex customers who saw their telephone rates skyrocket in the years that followed the sale of the state owned enterprise. And anyone who has lived or spent any time in Mexico knows, these new high prices certainly did NOT improve the quality of telephone service. Another example is the notorious “autopistas”, the Mexican highway system, which has experimented with privatization as well. Anyone who has driven these toll ways can attest to the outrageous toll prices, as much as $20 bucks for a 75 mile stretch, and how the roads are practical empty because no one in the country can afford to use them. The result has been massive government bailouts of many of the privatized highways. Despite this, Mexico’s illegitimate, new president Felipe Calderon (the George Bush of Mexico) is proposing new privatization schemes for the costly highways.

Calderon is also behind the call for the PEMEX reforms which would not privatize the state oil company outright, but would allow more foreign oil company involvement in the Mexican petroleum industry – a move many fear is a step toward undermining the cherished principal, enshrined in the country’s constitution, that oil should be treated as a national patrimony, a resource meant for the benefit of all Mexico’s citizens, not foreign economic interests. The reforms are opposed by the PRD (Partido de la Revolución Democrática) the furthest left of Mexico’s three major parties. They have pushed a national referendum on Calderon’s proposed reforms. While I was in Mexico, the Southern states were voting on the referendum. The Northern states will complete their voting by late August. Turn out has been low so far, but of those voting, over 80% have opposed any privatization moves.

They real issue here is not so much low gas prices, which ultimately are probably to low in the United States – they are much higher in Europe where fuel taxes take into consideration the environmental impact of private auto travel and where funds raised by the taxes are used to expand they already superior public transit system - The more important issue is who controls this vital resource, how is it conserved, and who profits from its exploitation. The gas price difference between the U.S. and Mexico is just one small, and perhaps not all that accurate, representation of how private ownership and unfettered “free” markets rarely benefit the working class majority. This is not mean to declare state monopolies the salvation of the working class either. One of the great mistakes of the history of left wing politics is the equation of working class power with nationalization. State enterprises can often exploit workers with just as much gusto as privately owned companies, and do not always pursue the wider community interests. Regardless the cult of privatization is ultimately not about economic efficiency – it is about shifting power from workers, citizens and communities into the hands of transnational corporations.

Tune into Labor Express radio in late August to hear interviews with Mexican labor activists opposing the privatization of PEMEX.

For more info on the current situation check out the following…


  1. Alright, so I'm RESPONDING already!

    Great article. Why is Calderon illegitamate?

  2. Thanks for your comment Patrick.

    I call Calderon illegitimate because he won the 2006 election under questionable circumstances. He beat the very popular left-leaning candidate of the PRD, Andres Manuel Lopez Obrador (or AMLO for short, as the call him in Mexico) by only .5 of the vote. .5%, less than 1 percent, not 5 %. Calderon in the end received only 35.8% of the total vote. There were widespread claims of voting irregularities as well. Some of the voting totals seemed to defy mathematical logic. In a country with a history of stolen elections, this was a major concern. But instead of a total vote recount or a run-off election between AMLO and Calderon, the Mexican Electoral Tribunal ruled in favor of Calderon. It is a more extreme version of the 2000 Elections in the U.S. where the Supreme Court basically handed the election to Bush.

  3. Wait a second! Are you implying that people's votes ought to be counted in elections? That's pretty radical. Why not let the voting machines do all the counting. I'm sure the makers of the voting machines are all politically nuetral. It would be ridiculous if they weren't!