Posted on 01/01/2009 6:29:13 AM PST by Flavius
exican officials could be left looking pretty smart if the price of oil keeps falling. Earlier this year, Mexico locked in contracts to sell its oil for $70 per barrel. Since the market price for a barrel recently fell to $35.35 per barrel, America’s largest trade partner south of the border is raking it in. Unfortunately, the fun is about to end for the U.S.’s Mexican neighbors—and that has big implications for America.
Oil is the single most important revenue stream for Mexico. A whopping 40 percent of its budget is derived from oil sales. And as the third-largest supplier of oil to America, most of it heads north to gas stations across the U.S.
However, Mexico could be facing a serious problem.
The Mexican government needs $70-per-barrel oil prices to balance its budget. For now, government spending is covered. But by the end of 2009, its fixed-rate contracts to sell oil at $70 will have expired.
If oil prices are still low by the end of next year, the government could be in real trouble. If oil had to be sold at today’s prices, almost 20 percent of the government’s budget would disappear.
(Excerpt) Read more at thetrumpet.com ...
Mexico was forced to employ its army to battle the drug lords since its domestic police forces were deemed too corrupt. However, as Stratfor has noted, the longer the war drags on, the more infiltrated and corrupt the army will become. It is not just a battle against drugs, guns and crime, but also against time.
hmm
Mexico is a facade. Behind it, the country is run by the drug cartel who has the pols in their pockets. The country is one big pile of crap and it stinks to high heaven. The country needs serious political overhaul. The first thing is to legalize drugs. While unpopular with many on here, legalizing it is the only way to stop the mind blowing killing that we are seeing now. One can not expect the Mexican gov and it’s corrupt military to properly handle the situation. Use market forces to tame and normalize something that humans have always done since we’ve been breathing. We do it with alcohol and we can do it with drugs.
I have been to Mexico. If fell decades ago.
I totally agree. America's insane drug policy is wrecking Mexico just as it nearly wrecked Colombia. Our complicity in this tragedy should not be overlooked.
Economic warfare! The final frontier.
Supply more than demand, the "corrupitalist market" collapses.
The one thing I don’t get is that people’s illogical answer against legalization is, “but more people will want to try it!” As if no is using it or trying it now? It’s a bogus argument. If heroin or coke became legal, I wouldn’t go out and try it because I have no use for it. Sure, there will be people who will try it but those same people would have done it legal or not.
They will do what all nations in trouble when the price of oil falls.. they will double and triple then quadruple production.
They will do what all nations in trouble when the price of oil falls.. they will double and triple then quadruple production.
I agree about legalizing marijuana. And maybe tight regulation of the harder drugs would handle that. But the seldom repeated truth about Prohibition is that while it did not succeed in ending the drinking of alcoholic drinks is that
it greatly dampened the use of coke and other such drugs until the ‘50s. So propoganda aagainst drug use should continue and maybe a turn around in the use of it, like that against tobacco, can be accomplished by a turn in public opinion. On the other hand, the American public is much more pleasure oriented than we were back in the ‘20s, 30s, and 40s, and we all have a lot more cash. Time will tell.
As fr Mexico, Mexico has always been a facade. Potentially one of the richest countries in the world, it has always been governed by cliques interested only in feathering their own nests. We look at our own elites and see parasites like Bernie Madoff. But we also have many more who are public minded. In Mexico, they are few and far-between.
They have a fair number of our pols in their pockets, too (all the way to the top), which is why legalization is highly unlikely. The status quo is very profitable.
I heard yesterday that Pemco, I think it is called, the national goobermint run Mexican oil company, was loosing money when oil was at $147 a barrel, so you know they are really in the red now, in spite of contracts at $70 bbl.
According to the Russians, the US is going to disintegrate in 2010, and Texas is going to become part of Mexico.
So obviously, the answer to your question will Mexico fail in 2009 or 2010 must be “no.”
Where would we get our tortilla chips? Gringos, they are muy funny. 
Vaya a Taco Bell cabrones.
What up wit dat?
Juss chill little buddies. 
Ain't but a thang.
Never saw that coming. 
Me either. How bout you?
Nope.
Big, knock that off...
...these folks drank way to much last night to deal with this today.
Greetings to all from a FREEPER in Mexico. For most of those reading these lines with their high school education, Mexico is still the backward country ruled by corrupt and wicked people, whose sole intent in life is to gain and hold power. I’ll be having lunch today in Toluca with a judge whose life daily is in danger because she issues long term sentences for narco dealers. It does seems hard to believe, but there are many of our neighbors who risk every day their physical well being to stop corruption at every level. Meanwhile, we’re watching over your Monarch Butterflies as they rest here in our hills, soon to return to a city near where you live.
That Russian guy said the southwest US is going to become part of Mexico (some might claim it already is) when the US breaks up this year or next. But what are we going to do if Mexico falls first? Are we going to have to forego our breakup? Or are we going to become part of Brazil?
Ruskies are always right!
/sarc
Gadzooks, big, you... 
got that right!
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