Mexico develops cheap energy; USA not quite

[longknife]

From Fausta's blog

Mexico Moves on Energy in Economic Reset
In Interview, Pemex Chief Says Overhaul to Broadly Cut Costs Mexico Sees Energy as Key to Reset Economy - WSJ.com

For decades, Mexico’s energy policy has largely boiled down to exporting oil for cash to fund state spending. Now the new government is negotiating with rival political parties to curb that practice and instead use state monopoly Petróleos Mexicanos to a different end: cheaper energy, said Pemex CEO Emilio Lozoya.

In an interview with The Wall Street Journal, the 38-year-old chief said the administration of President Enrique Peña Nieto was striving to overhaul tax and energy laws this year that Mr. Lozoya said would result in cheaper energy for consumers and companies that could drive a more competitive economy.

Read more @ Mexico Sees Energy as Key to Reset Economy - WSJ.com

What I've always found interesting about the Mexican gas stations is how it's not all that cheap. The government drills, refines, and distributes the fuel and, instead of selling it cheap to its people, it uses it to prop of government bureaucrats and politicians. Will this really change?

 

[waltky]

Throwin' good money after bad...

Energy Dep’t Funding Up 43.2% in Last Decade
February 26, 2013 – Funding for the Department of Energy increased 43.2 percent from 2002 through 2012, according to calculations based on Treasury Department data.

In fiscal year 2002 (Oct. 1, 2001 – Sept. 30, 2002), outlays for the Energy Department were $17,772,000,000, according to the Final Monthly Treasury Statement for fiscal year 2002. Adjusted for inflation, that would be $22,681,180,000 in 2012 dollars, according to the Bureau of Labor Statistics inflation calculator.

For fiscal year 2012 (Oct. 1, 2011 – Sept. 30, 2012), outlays for the Energy Department were $32,485,000,000, according to the Final Monthly Treasury Statement last September. That’s an increase of 43.2 percent for the last decade in real inflation-adjusted dollars.

Fiscal year 2008 outlays were $21,404,000,000 for the Energy Department. Adjusted for inflation that’s $22,824,720,000. That’s a 6.6 percent increase in the last four years for real inflation-adjusted dollars.

See more at: Energy Dep?t Funding Up 43.2% in Last Decade | CNS News

See also:

EPA Discovers Its 'Renewable Fuels' Program Is Vulnerable to Fraud
February 26, 2013 - The Environmental Protection Agency is taking steps to protect the "integrity" of its Renewable Fuel Standard program, after a con man sold $9 million in fraudulent renewable fuel credits to various energy producers, including Shell and Exxon Mobil.

“When invalid renewable fuel credits are ‘produced’ and sold, it undermines the integrity of an important program designed by Congress to reduce the nation’s dependence on foreign oil and to grow the nation’s renewable energy industry,” said EPA's Cynthia Giles in a Feb. 22 news release. Giles commented after a federal judge sentenced 34-year-old Rodney R. Hailey of Perry Hall, Md., to 12 years in prison for selling $9 million in renewable fuel credits, which he falsely claimed were produced by his company, Clean Green Fuel, LLC. “Any government program that is based on trust is vulnerable to a fraudster like Rodney Hailey,” said U.S. Attorney Rod J. Rosenstein. “The only thing Rodney Hailey’s ‘Clean Green Fuel’ business produced was the dirty money he used to fund his lavish lifestyle.”

According to evidence presented at his trial, Hailey registered Clean Green Fuel with the EPA under the Renewable Fuel Standard (RFS) program. Hailey claimed his company was a producer of bio-diesel fuel, a motor vehicle fuel derived from renewable resources. The EPA requires all oil companies that market petroleum in the U.S. to either produce a certain amount of renewable fuel themselves or to purchase credits, called renewable identification numbers (RINs), from producers of renewable fuels to satisfy their renewable fuel requirements. Validly generated RINs show that a certain volume of qualifying renewable fuel was produced or imported.

EPA says that between March 2009 and December 2010, Hailey engaged in a massive fraud scheme, selling over 35 million RINs (representing 23 million gallons of bio-diesel fuel) to brokers and oil companies, when in fact Clean Green Fuel had produced no fuel at all and Hailey did not even have a facility capable of producing bio-diesel fuel. Federal law enforcement agents investigated the scheme after learning about a large number of luxury cars parked in front of Hailey’s house. Hailey used the money he made from selling false RINs to purchase luxury cars, including BMWs, Mercedes Benz, a Rolls Royce Phantom, a Lamborghini, Ferrari, Maserati and others, as well as real estate and more than $80,000 in diamond jewelry.

The loss to the traders and major energy companies who purchased Hailey’s false RINs is more than $40 million, EPA said. The loss also extends to small bio-diesel companies, many of which were unable to sell their RINs and were forced out of business.

See more at: EPA Discovers Its 'Renewable Fuels' Program Is Vulnerable to Fraud | CNS News

 

[whitehall]

At least Mexico seems to understand that cheap energy is the best way to jump start the economy. Too bad the socialists in the US still think that windmills are the future while the cost of everything rises because of energy costs. Why are the Saudis so wealthy? It's all about oil.

 

[waltky]

Pemex to get a makeover...

Mexico's ruling party opens door to tax, energy changes
2 Mar.`13 - Mexico's ruling Institutional Revolutionary Party paved the way on Saturday for possible tax hikes and an overhaul of state oil giant Pemex as it seeks to spur growth in Latin America's second-biggest economy.

PRI delegates at a congress in Mexico City voted to change the party's position on refusing to consider the imposition of a value-added tax on food and medicine, and giving the party scope to open up Pemex to more private capital. President Enrique Pena Nieto wanted the changes, which run contrary to many old tenets of the PRI, so he would have more room to maneuver in boosting Mexico's low tax take and revamping its flagging oil industry.

PRI Congressman Javier Trevino said the changes would allow Mexico to modernize its tax system and energy sector, and give it a chance to devote more resources to helping the poor. "This is a good signal," he said, adding the modifications would allow the PRI to push for constitutional changes to entice foreign investors to the energy sector.

The centrist PRI lacks a majority in Congress, and is likely to face months of tough negotiation before it can lay out detailed plans on tax and energy reform. Those measures are expected to be presented in the second half of this year. No party has had a majority in Congress since 1997, hindering efforts to enact major change on tax and energy law.

But Pena Nieto surprised many critics when he unveiled a broad pact with the main opposition parties to work together on economic reform shortly after he took office in December. PRI financial experts are looking at ways of raising the Mexican tax take - currently the lowest in the Organization for Economic Cooperation and Development as a proportion of gross domestic product - by up to 6 points of GDP.

Applying VAT to food and medicine is controversial because the burden would fall most heavily on the poor, about half the country's population. PRI lawmakers say a large chunk of any additional revenue generated must go toward helping the poor. One option under discussion is applying a reduced rate of VAT on food and medicine. But even if the full rate of 16 percent were levied, it would only boost the tax take by about 1 percentage point of GDP.

OIL SHAKE-UP