Though Mexico Exports Crude, High Oil Prices Hurt Economy
By THE PULSE NEWS MEXICO STAFF
Although Mexico exports crude oil, it is a net importer of carbon-based fuel, meaning that it imports more oil products than it imports.
Consequently, the surging price of international oil, and by extension, all oil-based products, such as gasoline, will negatively impact Mexico’s finances, Janneth Quiroz Zamora, deputy director of economic analysis at the Monex Financial Group, explained in an interview with El Financiero newspaper published on Monday, March 14.
Since the end of 2014, Mexico has maintained a deficit in its oil trade balance, Quiroz Zamora said.
“Based on figures from the latest National Institute of Statistics and Geography (Inegi) on (Mexico’s) trade balance, we see that in January of this year there was a considerably higher deficit than in January of last year,” she said.
“The increase in the price of oil has two effects: Since we also export, on that side the rise in prices of the so-called ‘black gold’ is a positive fact, since the government receives a higher payment for the sale to other countries. But on the import side, we are also going to be paying more for purchases from abroad,” she warned.
Since 2015, Mexico’s oil trade balance has been in deficit due to the decline in crude oil production, and in 2021, it increased by $24.926 billion, which added to seven years with a negative balance, according to Inegi records, she said.
Oil exports in 2014 amounted to $28.926 billion, compared to over $50 billion at the beginning of the last decade.
Meanwhile, Mexico oil imports in 2021 totaled $53.851 billion, a historical high.
“The bad news here is that we import more than we export, which means that for the country’s economy as a whole, for Mexicans, (higher oil prices) will cost us more than it will benefit us,” said Quiroz Zamora.
“We are also seeing that the effects of Russia’s war with Ukraine will impact the country in several ways, she said.
“On the one hand, due to high international oil prices that we have seen, but also in higher prices of other commodities, as well as a depreciation in the peso-dollar exchange rate.”
The government of President Andrés Manuel López Obrador (AMLO) has stated that the oil surplus will be used to cover the subsidy to keep the national price of gasoline stable.
However, Quiroz Zamora said that it will be difficult to have control over the national oil price structure, and for many service stations to keep their prices stable.