Exasperated by the government's performance in economic and social matters, thousands of Mexicans have protested since January 1 against the rise in oil prices, in demonstrations that have already left at least six dead, and led to looting and roadblocks. One of the demonstrations had its epicentre in the symbolic Independence Angel, on Paseo de la Reforma, in Mexico City. Credit: Emilio Godoy/IPS

By Emilio Godoy
MEXICO CITY, Jan 11 2017 (IPS)

“We are absolutely fed up with the government’s plundering and arbitrary decisions. We don´t deserve what they’re doing to us,“ said Marisela Campos during one of the many demonstrations against the government´s decision to raise fuel prices.

Campos, a homemaker and mother of two, came to Mexico City from Yautepec, 100 km to the south, to protest the recent economic decisions taken by the administration of conservative President Enrique Peña Nieto.

“Everything’s going to go up because of the gasolinazo“ – the popular term given the 14 to 20 per cent increase in fuel prices as of Jan.1, said Campos, while she held a banner against the measure, in a Monday Jan. 9 demonstration.

The measure unleashed the latent social discontent, with dozens of protests, looting of shops, roadblocks, and blockades of border crossings throughout the country, carried out by trade unions, organisations of farmers, students and shopkeepers.“It is too big of an increase. It is a very big, direct and precise blow to people's pockets. They are feeling it. People do not understand the reform, because they don't read laws, not even those on taxes.“ -- Nicolás Domínguez

The simultaneous price hikes for fuel, electricity and domestic gas were a spark in a climate of discontent over growing impunity, corruption and social inequality.

The protests, which show no signs of subsiding, have led to at least six deaths, some 1,500 people arrested, and dozens of stores looted.

“We are opposed to Peña Nieto’s way of governing. The price rises and budget cutbacks have been going on since 2014. Now there will be an increase in the cost of the basic food basket and transport rates,“ Claudia Escobar, who lives on the south side of Mexico City, told IPS during another demonstration.

Escobar, a mother of three, decided to join the protests because of what she described as “serious social disintegration and turmoil.“

In response to the social discontent, the government argued that the price rises were in response to the increase in international oil prices since the last quarter of 2016, and insisted that without this measure, budget cuts with a much more damaging social impact would have been necessary.
But the rise has its origin more in the elimination of a fuel subsidy which up to 2014 absorbed at least 10 billion dollars a year, as well as in the state-run oil company Pemex’s limited productive capacity.

To this must be added the government’s tax collection policy, where taxes account for 30 per cent of the price of gasoline.

In addition, energy authorities seek to make the fuel market more attractive, because its freeing up is part of the energy reform which came into force in 2014, and opened the oil and power industries to private capital.

Peña Nieto, in office since December 2012, promised Mexicans that this energy reform would guarantee cheap gasoline for the domestic market.

Pemex’s oil extraction has been in decline since 2011, and in 2016 it fell 4.54 per cent in relation to the previous year.

In November, crude oil production amounted to 2.16 million barrels a day, the lowest level in three decades, due to an alleged lack of resources to invest in the modernisation of infrastructure.

Gas and diesel production suffered a similar decline over the past two years, with a 15.38 per cent decrease between 2015 and 2016, when Pemex refined 555,200 barrels equivalent a day of both fuels combined.

This forced a rise in fuel imports, mainly from the United States, with Mexico importing in November 663,300 barrels equivalent a day, 15.88 per cent more than in the same month the previous year.

Traditionally, Pemex contributed 33 per cent of the national budget, but the collapse in international prices since 2014, and its contraction in activity, reduced its contribution to 20 per cent, which compels the government to obtain income from other sources.

For Nicolás Domínguez, an academic at the state Autonomous Metropolitan University, the government is facing the complex situation with “simplistic and incomplete“ explanations.

“It is too big of an increase. It is a very big, direct and precise blow to people’s pockets. They are feeling it. People do not understand the reform, because they don’t read laws, not even those on taxes.“ he told IPS.

But the public “do understand when they go shopping and they can’t afford to buy what they need. That makes them angry. And when they ask for explanations, the government tells them that in United States gasoline prices have gone up, that they have gone up everywhere.”

The common prediction of critics of the gasolinazo is its impact on the cost of living, which in the last few months has been spiraling upwards, with inflation standing at around 3.4 per cent by the end of the year, according to still provisional figures.

The non-governmental organisation El Barzón, which groups agricultural producers, warns that the price of essential goods could climb by 40 per cent over the next months.

“It is likely that there will be serious repercussions on national agricultural production and in households,“ the organisation’s spokesman, Uriel Vargas, told IPS. He predicted that the impact of the rise in fuel prices will be “an increase in the levels of inequality, which are already a major problem.”

For Vargas, “the government must take action to avoid a rise in prices.“

According to 2014 official figures, 46 percent of Mexico’s 122 million people were living in poverty – a proportion that has likely increased in the last two years, social scientists agree.

The gasolinazo canceled out the four percent rise in the minimum wage adopted this month, which brought the monthly minimum to 120 dollars a month.

As demonstrated by the Centre for Multidisciplinary Analyses of the Mexico National Autonomous University, the minimum monthly wage, earned by about six million workers, does not satisfy basic needs.

In its “Research Report 126. The minimum salary: a crime against the Mexican people,“ the Centre concluded that the minimum wage has lost 11 per cent in buying power since Peña Nieto took office.

The study states that it takes three minimum wages just to put food on the table.

To make matters worse, Mexico’s economic growth will range only between 1.5 and 2 per cent, and a further weakening of the economy is possible, according to several projections, due to the impact of the protectionist policies of Donald Trump, who will take office as U.S. president on Jan. 20.

In an attempt to calm things down, Peña Nieto presented this Monday Jan. 9 an “Agreement for Economic Strengthening and Protection of the Domestic Economy,“ which includes a 10 per cent cut in the highest public sector wages.

But for observers, these are merely bandaid measures.

“What the government wants is to calm people down. These are small remedies and what people want is a drop in gas prices. The question is what direction do they want Mexico to move in. If it is about improving the well-being of families, this is not the best way. If the demonstrations spread, the government will have to back down,“ said Domínguez.

For people such as Campos and Escobar, the starting point is reversing the increase in oil prices.

“We will persist until the rise is reverted and there is a change,“ said Campos, while Escobar added “we hope that they understand that we will not stay quiet.“

On February 4 there will be another price adjustment, another spark to the burning plain that Mexico has become.

Three trends underlie falling U.S. gasoline use: a shrinking car fleet, an overall reduction in driving, and improved fuel efficiency. Credit: Scott63us/cc by 2.0

By Janet Larsen
WASHINGTON, Mar 29 2013 (IPS)

Freeing America from its dependence on oil from unstable parts of the world is an admirable goal, but many of the proposed solutions – including the push for more home-grown biofuels and for the construction of the new Keystone XL pipeline to transport Canadian tar sands oil to refineries on the U.S. Gulf Coast – are harmful and simply unnecessary.

Gasoline use in the United States is falling, and the trends already driving it down are likely to continue into the future, making both the mirage of beneficial biofuels and the construction of a new pipeline to import incredibly dirty oil seem ever more out of touch with reality.

U.S. motor gasoline consumption peaked at 142 billion gallons in 2007. In each year since, American drivers have used less gasoline. In 2012, gas use came in at 134 billion gallons, down six percent off the high mark.

Three trends underlie falling U.S. gasoline use: a shrinking car fleet, an overall reduction in driving, and improved fuel efficiency. The number of registered vehicles in the United States rose rather steadily from 1945 to 2008, when it topped out at close to 250 million and then abruptly changed course.

As the economic recession hit, new car sales in the United States fell from more than 16 million in 2007 to below 11 million in 2009. For two years, scrappage exceeded new purchases, causing a contraction in the overall size of the fleet. Even with a rebound in sales to nearly 15 million vehicles in 2012, the days of annual sales exceeding 17 million – as seen through the early 2000s – are likely over.

The car promised mobility, but in urbanising communities it instead brought traffic congestion and air pollution. With four out of five Americans now living in urban areas, private vehicle ownership is starting to lose its allure. This is particularly true among younger people, who are readily embracing mass transit and the car-sharing and bike-sharing programmes that are popping up in cities around the country.

Fewer than half of American teenagers ages 15 to 19 have a driver’s license, a share that has been falling over recent decades as states have tightened restrictions and as socialisation patterns have shifted from cruising the streets to cruising the Internet. Retirees also tend to drive less; as the baby boomers retire, more people will be putting away their car keys.

As gasoline prices have risen, private vehicles have traveled fewer miles and public transit ridership has increased. Not only are there fewer vehicles traveling fewer miles on U.S. roads than there were just five years ago, but new cars today can drive farther on a gallon of gasoline.

This will soon accelerate: after more than two decades of near-total stagnation, in 2011 the Obama administration increased fuel efficiency standards for cars and light trucks from an average of 27.5 miles per gallon in 2008 to 54.5 miles per gallon by 2025. In addition to the technological changes that can improve the fuel economy of conventional vehicles, new plug-in hybrid electric cars and fully electric vehicles use far less gasoline or even do away with it entirely.

Somewhat counterintuitively, falling gasoline use is at odds with the federal mandate to use more renewable fuel. Under the 2007 Energy Independence and Security Act, the Renewable Fuels Standard (RFS) requires blending increasing volumes of ethanol into the U.S. gasoline supply, regardless of how much gasoline is needed.

In 2012, U.S. distilleries produced 13 billion gallons of fuel ethanol, almost entirely from corn. Ethanol accounted for nearly 10 percent of the U.S. gasoline supply. The 2013 requirement for 13.8 billion gallons is likely to go beyond the 10-percent threshold of what can be blended into gasoline and still be used in older vehicles without risking engine damage and voiding warranties.

Furthermore, the RFS requires a growing share of the renewable fuel to come from cellulosic non-food biofuels, yet these have not become economical to produce on a meaningful scale. The increasing production of corn-based ethanol has pitted food use against fuel use, with the unfortunate result of higher food prices.

As drought in the U.S. Corn Belt shrank harvests in 2012, corn prices spiked to an all-time high. U.S. corn carryover stocks fell to six percent of use in 2012, a historic low. Still, more than 40 percent of the 2012 corn harvest will likely go to fuel cars.

While corn exports from the United States were down in 2012, gasoline exports were up. Higher domestic production and reduced demand allowed the United States to export more oil products than it imported for the second year in a row – after more than six decades of being a net importer.

The United States is still a net importer of crude oil, though. Instead of necessarily allowing more gasoline to reach U.S. markets, the proposed Keystone XL pipeline would bring the carbon-intensive Canadian tar sands oil closer to Gulf Coast export terminals for easier access to international markets.

A March 2013 report by the National Research Council describes policies and technologies that would allow the United States to cut its gasoline use 80 percent by 2050. Yet the data they used on the distances being driven only went through 2005, missing the recent drop, and many of the social trends that are starting to drive down car use were not incorporated.

These trends are important to consider when envisioning energy and transportation policies for the future. This means rethinking mobility beyond private automobiles. And putting a price on carbon to encourage powering the cars still on the roads with carbon-free wind-sourced electricity can help move the United States beyond ecologically disruptive false solutions that raise food prices and further destabilise the climate.

*Janet Larsen is Director of Research at the Earth Policy Institute. Data and additional resources available at www.earth-policy.org.

Small scale vendor or “pimpinero” sells Venezuelan gasoline in Colombia. Credit: Lester Ramos/IPS

By Humberto Márquez
SAN CRISTÓBAL, Venezuela , Sep 26 2012 (IPS)

It’s a straightforward calculation: a litre of gasoline costs 62 times more in Colombia than in Venezuela, a difference that fuels smuggling and crime along the border.

“What I earn repairing tires is not enough, I have four kids to support,” Trino L. tells IPS as he patches a tire on the roadside in the state of Táchira in southwestern Venezuela, bordering the Colombian province of Norte de Santander.

“Repairing tires I can earn 3,000 bolívars a month (700 dollars at the official rate), while smuggling gasoline I can get two, three or four times as much, depending on what I have to pay (in bribes) along the way,” said Trino.

Táchira and Norte de Santander are crossed by the eastern branch of the Andes mountain chain which gives rise to a wealth of river valleys.

There are few road passes; the main one connects the Venezuelan city of San Antonio with Cúcuta, the capital of the Colombian province.

The Simón Bolívar international bridge can be crossed by foot, car or bicycle – no documents are required and there are few inspections. On the Colombian side, small-scale vendors of gasoline, known as “pimpineros,” peddle the fuel along the highway, without safety precautions, from small plastic containers.

“I get my gasoline from a wholesaler who brings it from Venezuela. I have no idea how, that’s not my business; there may be something illegal on the Venezuelan side but not here – there are thousands of us who make our living this way,” Luis Duque, a young pimpinero who stores thousands of litres of fuel behind a small grocery store, told IPS.

“The main thing is the price differential. The government decided to regulate retail sales of gasoline throughout Táchira, but who is regulating the wholesalers? This is the responsibility of PDVSA (the Venezuelan state oil company) and the armed forces who guard the border,” state Governor César Pérez, a Christian Democrat opponent of the national government of President Hugo Chávez, said at a press conference.

Last year the government introduced an automated system for gasoline purchases in Táchira. Authorised stations sell gasoline to vehicles carrying a bar code on their windshield, linked to a database indicating the amount assigned to each one.

But the amounts assigned by the authorities to private vehicles, taxis, passenger and freight transport are giving rise to complaints that the measure is arbitrary and discriminatory, as it only applies to Táchira.

Sonia Medina, the Táchira state government’s head of economic development, said “the regulation and rationing of gasoline has not improved our people’s quality of life, and wholesale smuggling continues. It will not cease as long as the price difference continues to be 62 to one.”

A gallon (3.8 litres) of gasoline costs the equivalent of 4.92 dollars in Colombia, compared to just eight cents in Venezuela, because of the heavy subsidies that make gasoline in this country among the cheapest in the world.

In Colombia, Cristian Buitrago, acting governor of Norte de Santiago, concurred that “the decisive factor is that Venezuelan gasoline is so much cheaper. What one side may view as contraband could also be seen as opportunity cost.”

José Miguel González, the executive head of the Cúcuta Chamber of Commerce, said “our population has a low level of education but a high level of competitiveness. The price differential allows 1,000 percent profits to be made from smuggling gasoline.”

“During Spanish colonial times, local smugglers were known as ‘cascareros’, and there has been a culture of smuggling ever since,” said Javier Sánchez, head of the governing United Socialist Party of Venezuela in Táchira. “Nowadays it is not only gasoline, but also food and medicines, subsidised in our country, that are trafficked.”

The price difference “allows those who engage in contraband to bribe whoever they need to bribe. People on the Colombian side solve a social problem, namely unemployment. We need national policies, including military vigilance, to adequately deal with Táchira as a border state,” Sánchez said.

Jesús Berro, head of the Táchira state police force, said “this is an area characterised by a great many illicit activities, including money laundering, which sustain a variety of criminal groups. There has been an increase in the number of murders by hired killers.”
The crime wave worries Luis Hernández, head of the Táchira Association of Cattle Ranchers. “Our main problem is insecurity. There are armed groups in the region that are outside the law: kidnappers, drug traffickers, and Colombian and Venezuelan guerrillas and paramilitaries,” he said.

“We have to deal with two types of crime: common crime, arising from the social breakdown in Venezuela, and border crime, arising from being adjacent to all the conflicts suffered by Colombia, and from this asymmetric economy that gives rise to criminal gangs,” said Pérez.

But in spite of the mounting problems, Táchira “has great potential as a centre for border trade, as an agricultural, livestock, agribusiness and mining (coal and phosphates) region, and as a tourist centre,” the governor added.

Across the border, in Norte de Santander, “we consider it a privilege to be on the border,” governor Buitrago said. “It brings comparative advantages even though it creates difficulties, and it is our opportunity. In the past we focused on trade and neglected industry; now we must overcome that neglect.”

“Norte de Santander has potential for agriculture and mining (oil, gas and coal), and 21 municipalities are reserved for nature tourism,” said González of the chamber of commerce. “But an area with 1.3 million people centred on Cúcuta is basically a service region tied to Venezuela’s economic cycles.”

San Cristóbal, the capital of Táchira, “has one million people in its metropolitan area and we envisage it as a twin city for Cúcuta and a centre for the supply of goods and services on the border, including education and health,” said Daniel Ceballos who is running for mayor as the candidate of the Coalition for Democratic Unity, an opposition alliance.

“When all is said and done, over half the people of Táchira have ties to Norte de Santander, and a large part of the people of that Colombian region are connected with people here,” said the Catholic bishop of Táchira, Mario Moronta, speaking for those in favour of opportunities to overcome the problems. “They may think differently in Bogotá and in Caracas, but this is how things are here and will continue to be.”