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September 2, 2005

Border Gasoline Sales Up; Wider Economic Impact Uncertain

Not long ago, Mexican motorists crossed into border cities like El Paso or Laredo to fill up their gas tanks with cheaper US-priced fuel. Anecdotal reports from the US-Mexico border suggest the opposite is now happening as a still- unknown number of US bargain-seekers head into Mexico for relief from record-high prices.

"The people are no longer traveling to Laredo to buy gasoline, because it costs them more, on top of using up gasoline and paying the bridge tolls," said Hector Pena Saldana, the president of the Gasoline Station Owners association in Nuevo Laredo, Tamaulipas. "Now it's the people of Laredo who are crossing over to Nuevo Laredo to fill up and we have to take advantage of that 100 percent," Pena said.

Recent reports from Nuevo Laredo, Ciudad Juarez and Nogales estimated retail gasoline sales in recent weeks increased between 10 and 20 percent, depending on the city. The trend began well before Hurricane Katrina struck the US Gulf Coast, picking up pace as regular price hikes hit US pumps.

Gasoline prices in US border cities hovered above or around the three-dollar per gallon mark by the start of the Labor Day weekend holiday, but retail prices in Mexican border cities, which are pegged to the national Mexican market instead of the U.S. one, were as much as 41 percent cheaper. Sergio Parra Tapia, the director of the Ciudad Juarez branch of the National Organization of Petroleum Distributors, said price differentials between Juarez and neighboring El Paso, Texas, widened from 14.7 percent in mid-August to 40.7 percent at the end of last month.

In Reynosa, Tamaulipas, an official for the national Mexican oil company Pemex discounted gasoline shortages due to rising US demand. Pemex spokesman Genaro Elizondo Rosales said the company was working to meet the market upturn.

One factor working against an even bigger cross-border, gas-buying spree is the reputation of Mexican gasoline as having a lower quality. Alfredo Ponce Fernandez, the president of the Gasoline Dealers Association in Nogales, Sonora, insisted Pemex does regular quality checks of gas stations but acknowledged that border consumers prefer to purchase higher-quality fuel on the US side. Periodic reports surface in Mexico of adulterated gasoline being sold to unsuspecting customers and sometimes damaging automotive engines.

Mexican border gas and oil industry representatives expressed optimism the upsurge in retail sales at the pump could give a shot-in-the-arm to other economic sectors, enticing drivers to do other shopping and spending while in Mexico. On the flip side, a recent poll conducted in the US border state of California revealed counter-forces undermining prospects for a broader, border economic boom.

A survey of 465 people by the Field Poll found that 60 percent of respondents were using their vehicles less to travel. One group of polled Californians, 54 percent of people earning less than $40,000 dollars annually, said they had cut back spending on food, clothing and entertainment because of gasoline prices. Almost half of the people sampled in the poll, 47 percent, blamed the gasoline crisis on President Bush, while 58 percent blamed the oil companies.

Sources: El Manana (Nuevo Laredo), September 2, 2005. Article by Marco Martinez.

Diario de Juarez, September 2, 2005. Article by Alfredo Mena M.

Norte (Ciudad Juarez), September 2, 2005. Article by Francisco Cabrera.

La Prensa de Reynosa, September 2, 2005. Article by Luis Alberto Triana F.

Nuevo Dia (Nogales), September 2, 2005. Diario de Juarez, September 1, 2005. Article by Gabriel Simental.

La Cronica, September 1, 2005. Article by Pablo Jaime Sainz.

Frontera NorteSur (FNS): on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico

For a free electronic subscription email fnsnews@nmsu.edu

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Editor, Upper Valley Beacon

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