BajaNomad

Mexico set to import oil.

Oso - 12-12-2007 at 04:49 PM

December 9, 2007
Oil-Rich Nations Use More Energy, Cutting Exports
By CLIFFORD KRAUSS

The economies of many big oil-exporting countries are growing so fast that their need for energy within their borders is crimping how much they can sell abroad, adding new strains to the global oil market.

Experts say the sharp growth, if it continues, means several of the world's most important suppliers may need to start importing oil within a decade to power all the new cars, houses and businesses they are buying and creating with their oil wealth.

Indonesia has already made this flip. By some projections, the same thing could happen within five years to Mexico, the No. 2 source of foreign oil for the United States, and soon after that to Iran, the world's fourth-largest exporter. In some cases, the governments of these countries subsidize gasoline heavily for their citizens, selling it for as little as 7 cents a gallon, a practice that industry experts say fosters wasteful habits.

"It is a very serious threat that a lot of major exporters that we
count on today for international oil supply are no longer going to be net exporters any more in 5 to 10 years," said Amy Myers Jaffe, an oil analyst at Rice University.

Rising internal demand may offset 40 percent of the increase in Saudi oil production between now and 2010, while more than half the projected decline in Iranian exports will be caused by internal consumption, said a recent report by CIBC World Markets.

The report said "soaring internal rates of oil consumption" in
Russia, in Mexico and in member states of the Organization of the Petroleum Exporting Countries would reduce crude exports as much as 2.5 million barrels a day by the end of the decade.

That is about 3 percent of global oil demand. It may not sound high, but experts say demand for oil is so inflexible, and the world has so little spare production capacity, that even small shortfalls can raise prices. In 2002, when a labor strike in Venezuela took 3 percent of global production off line, oil prices spiked 26 percent within weeks.

The trend, though increasingly important, does not necessarily mean there will be oil shortages. More likely, experts say, it will mean big market shifts, with the number of exporting countries shrinking and unconventional sources like Canadian tar sands becoming more important, especially for the United States. And there is likely to be more pressure to open areas now closed to oil production.

Greater political stability and increased drilling in some important oil states, notably Iraq, Iran and Venezuela, could help offset the rising demand from other oil exporters.

"Ten years from now, world capacity to produce oil could be 20
percent higher than today," said Daniel Yergin, chairman of Cambridge Energy Research Associates. "But a lot will depend on how the geopolitics work out."

Growth in demand among oil exporters is one aspect of a larger issue, breakneck economic growth in parts of the developing world. China and India are expected to account for much of the increase in global oil demand in the next 20 years. But Fatih Birol, chief economist at the International Energy Agency in Paris, rated consumption growth among oil exporters as the second-biggest threat to meeting the world's oil needs.

"It's a big problem, and growing all the time," Mr. Birol said
Internal oil consumption by the five biggest oil exporters — Saudi Arabia, Russia, Norway, Iran and the United Arab Emirates — grew 5.9 percent in 2006 over 2005, according to government data. Exports declined more than 3 percent. By contrast, oil demand is essentially flat in the United States.

CIBC's demand projections suggest that for many oil countries,
including Saudi Arabia, Kuwait and Libya, internal oil demand will double in a decade.

Factors contributing to the trend include increased industrialization, higher government spending and increasing personal consumption. According to a World Bank report, economic growth in the Middle East and North Africa has doubled since the 1990s, and Russia has done even better.

Oil money is giving many countries the means to invest in their own economic development, and robust global growth is creating markets for their goods — including plastics, chemicals and fuels refined from oil.

To be sure, many oil-exporting states have a long way to go before they achieve Western living standards. The global oil market is still dominated by traditional consumers, particularly the United States, which uses nearly a quarter of the world's oil.

Perhaps surprisingly, though, some producing countries have surpassed the United States in oil consumption per person. They include Bahrain, Kuwait, Qatar and the United Arab Emirates.

Particularly in oil-producing countries with large populations, like Indonesia, Russia and Mexico, a rapid rise in car ownership is a big factor driving consumption increases. Russian farmers are replacing horses and carts with gas-guzzling four-wheel-drive vehicles, while urban consumers are snapping up BMWs even before they learn to drive.

"Most of the producing countries have young populations entering the driving age and can more readily afford to buy cars because the price of fuel is low," said Charles McPherson, an oil expert at the International Monetary Fund. "It's certainly pulling product off the international markets."

Some oil-exporting countries use price controls and subsidies to
ensure cheap fuel for their people. These programs are politically popular, even though experts say they contribute to wasteful energy use.

Kuwaitis, for instance, often leave their air conditioning — powered by electricity generated from natural gas or oil-derived fuels — running for weeks while on vacation, said an official at the World Bank. Sportsmen of the United Arab Emirates ski indoors on manufactured snow and play golf on lush courses that require desalinated water produced with fuels refined from oil.

Saudis, Iranians and Iraqis pay 30 to 50 cents a gallon for gasoline. Venezuelans pay 7 cents, and demand is projected to rise as much as 10 percent this year. Auto sales have tripled in four years. "Where cheap oil is viewed as a national human right, you've virtually got runaway demand," said Chris B. Newton, an executive of the Indonesian Petroleum Association in Jakarta.

Indonesia flipped from exporting oil to importing it three years ago because of sagging production in depleted fields and rising demand. Iran, Algeria and Malaysia are vulnerable in the next decade. Most oil experts view Mexico as the next country likely to flip, in as little as five years.

Rapidly falling production in Mexico's aging Cantarell oil field is
part of the problem. Also significant, though, is the rising number of cars on Mexican roads. They have nearly doubled, to almost 16 million, in the last decade, and gasoline consumption is growing 5 percent a year.

In Mexico City the other day, a bricklayer named Jaime Guerrero
arrived at a local Chevrolet dealership. His extended family
cried "bravo!" as he signed the papers for his first car.

"To have a new car in my name is a dream transformed into reality," said Mr. Guerrero, 26. He and his family piled in and weaved through the chaotic traffic of the capital, hunting for a priest to douse the car with holy water.

"I don't worry about the climate or shortages of oil in the world," Mr. Guerrero said. "I just worry if gasoline prices go up."

Reporting was contributed by Wayne Arnold from Singapore; N-zila Fathi from Tehran; Jens Erik Gould from Caracas, Venezuela; Andrew E. Kramer from Moscow; Elisabeth Malkin from Mexico City; and Jad Mouawad from Riyadh, Saudi Arabia.
NY TIMES.

gnukid - 12-12-2007 at 08:25 PM

I understand that Mexico imports 100% of its refined gas in exchange for its' unrefined oil as Mexico has no oil refineries, therefore Mexico would not be importing oil in the near future. Mexico may choose to not increase its' oil production in line with its' use of refined, since foreign oil would be cheaper now as opposed to later, Mexico wants to retain its' oil for as long as possible much like the USA and use it in times of crisis.

At SOME point....

djh - 12-12-2007 at 09:01 PM

Is this the beginning of supply exhaustion...? It IS a limited resource... and (now gobally) we're still gobbling it up and belching it out like there really IS no brick wall dead ahead (at full throttle)...

BTW... when I was little, my teachers said that the population of the earth would double in my life time... and it has nearly tripled already....

The times they are a changin'.
djh

Al G - 12-12-2007 at 10:27 PM

http://forums.bajanomad.com/viewthread.php?tid=28573
For the ones with the ability to read long and boring, but comprehensive material (gibson...well...ugh..er your excused) you may glean real world strategy concerning balance of power and how to maintain it...we are dealing in a realistically small time frame...say 10 years, and we are transitioning to a new world energy, but lack
infrastructure. The countries that are burning their only assets have a rude awaking coming quicky...no need to return to third world, but their grab for money is almost over...Bush /Chaney has given us the time needed to switch to hydrogen energy and backed by nuclear assets. Our coal reserves to make hydrogen are enough to last us and Mexico a 100+ years without nuclear, but they are not necessary.
Read both and try to tie them together...comprehension level is high.
Expect a lot of strife and peril from the muslim nations as they have most to lose (oil is their only asset) and they know it...if you don't know it, then you cannot grasp the world on a whole.

toneart - 12-13-2007 at 12:03 AM

Maybe Mexico will develop a nuclear program for peaceful energy purposes and then have it seized by a cartel. Might make you want to divert your attention from Iran, huh Dick Cheney? Oh, don't worry....the fence will take care of it.
General Hayden (who still has his uniform on) has it under control.Ooops, what happened to the tapes??? Never mind.

Don Alley - 12-13-2007 at 09:48 AM

Quote:
Originally posted by lencho
Quote:
Originally posted by gnukid
I understand that Mexico imports 100% of its refined gas in exchange for its' unrefined oil as Mexico has no oil refineries.


I question that. Source, please?

--Larry


Mexico's Salamanca refinery:


There are more refineries in Mexico.

gnukid - 12-13-2007 at 10:52 AM

I am not an oil expert. Perhaps someone here is. I only know what I read and have been told by those who work in oil that Baja Mexico and much of the nearby mainland has in the past not had refineries such as required to refine oil to the degree that is required for gas vehicles that use modern unleaded gas. They refine to a much lower level and ship that oil to the US in exchange for highly refined oil as used in gas vehicles.

Something about the number of turns in the pipes... I believe the article states that more refineries are needed.

Ricardo - 12-16-2007 at 07:22 PM

Mexico has a number of refineries that produce the Gasoline and diesel used in Mexico, no problem with Quality.
http://www.pemex.com/
Rick

gnukid - 12-16-2007 at 07:25 PM

jajajajaja Por que niguno tiene problemos con gas... aha el verde esta mal y el rojo perore?

[Edited on 12-17-2007 by gnukid]

Importing Refined Product

MrBillM - 12-17-2007 at 10:41 AM

It was pointed out at least a year ago in a Los Angeles Times Business article that the value of the Oil exported by Mexico to the United States is higher than the value of the refined products imported from the U.S., but not to a great degree. The continued inability of Mexican Refineries to meet domestic growth requirements is a fact.



[Edited on 12-17-2007 by MrBillM]

Al G - 12-17-2007 at 11:08 AM

Quote:
Originally posted by MrBillM
It was pointed out at least a year ago in a Los Angeles Times Business article that the value of the Oil exported by Mexico to the United States is higher than the value of the refined products imported from the U.S., but not to a great degree. The continued inability of Mexican Refineries to meet domestic growth requirements is a fact.

YTD Import totals of Petroleum products place Mexico at number two worldwide after Canada.

YTD 2007 (Thousand Barrels per Day)


Canada 2,427 Mexico 1,550

Source: Energy Information Association - Official Energy Statistics from the U.S. Government


[Edited on 12-17-2007 by MrBillM]


Boy was I laboring under a big misconception...I thought the US was number 1 importing millions per day...

Edit: thinking inside the box again:lol:


[Edited on 12-17-2007 by Al G]

Mea Culpa

MrBillM - 12-17-2007 at 11:31 AM

The information I was looking up was for "refined" Petroleum products. The U.S. is still the number one importer of Crude oil.

Nonetheless, I still found that I was quoting from the wrong graph.

Looking directly at U.S. Only exports of refined product to Mexico in 2006 that averaged 255,000 barrels per day.