Tuesday, June 17, 2008

Gasoline and Mexico

The Houston Chronicle has an article that adds some information to the policy I proposed a few months ago to exchange more visas and citizenships for liberalization of Mexico's oil industry.

The specific quotes I found interesting were:

"The kick is that the fuel is being refined in the United States and trucked across the border to Mexico, only to be sold at prices subsidized by the government..."

"So even while the nation still exports crude oil, it imports about 40 percent of its fuel."

Mexico, because it refuses to allow American investment in their oil industry, does not have the refining capability or technology to produce their own gasoline. This demand for gasoline likely drives up the price of gasoline in the U.S. My policy proposal would fix this.

Mexico's subsidization of gasoline also leads its citizens to consume more gasoline than if the price were allowed to float in the market. This decrease in consumption would lead to less consumption of gasoline from the United States. It would also decrease the demand on crude oil.

One way to lower gas prices is to offer Mexico incentives to allow American investment in their energy industry and drop their subsidization of gasoline. Offering more avenues of immigration can be this incentive.

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