To my American friend,
I have been seeing a lot of e-mails that my friends from the US keep sending me about the price of gasoline. Most of them try to make others to boycott a particular company’s gasoline. This, of course will never work, since we all use gasoline every day and simply cannot go completely without. But, I was reading Fortune magazine, and it said that the high gasoline prices had lessened demand in the US by 1% over the previous year. This is exactly what simple economics says will happen; as prices rise, people will buy less and even try to find substitutes. So, people combine trips to the market, or buy a car that gets more miles for the gallon of gasoline.
I also want to let my American friends know that there are some things that they can do that would have an immediate and dramatic impact on the gasoline price.
1. Have your US President Bush, promise to the world to never use atomic weapons. This was the former policy of America, but Mr. Bush has been ambiguous about using atomic weapons against Iran. This makes futures markets very unsure, which is reflected in prices of oil going up. The world might believe Mr. Bush’s no atomic weapons promise, especially if he gives up his idea of restarting atomic bombs testing in Nevada. This really scares we people outside of America.
2. Mr. President Bush should also reassure the UN and the world that diplomacy and only diplomacy will be used in dealing with Iran. As we say in México, “No juegues con fuego, porque te puedes quemar”. Don’t play with fire because you can be burned. The Iran people have threatened to close the Hormuz Straits, if the Americans try any military adventure in Iran. This, my American friends would make gasoline $10 the gallon.
3. Tell Jack Daniels to keeps making whiskey and not fuel for cars. The Energy Bill of 2005 that your Congress passed last year, makes refiners use ethanol instead of MTBE as an “oxygen” fuel. Well, there isn’t enough ethanol in the world to mix with gasoline that Americans use each day. But, maybe I could talk to my friends at José Cuervo. Maybe American Congress could make refiners add tequila to gasoline for “oxygen” fuel. (but no worm, of course) Without joking, your American Congress just likes to make subsidies for the red state friends that grow corn and make whiskey. Write a letter and tell them to stop the corn subsidies.
4. Mr. Ben Bernanke at the Bank of Federal Reserve of US is a little loco, as they say down here. He said this, "The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money system, a determined government can always generate higher spending and hence positive inflation." Mr. Bernanke and Mr. Greenspan have created so much dollars out of thin air that, of course, gasoline and just about everything else cost more. This, my American friends, is called inflation, an increase in the money supply, and it does exactly what Mr. Bernanke says it does, “raising the prices in dollars of those goods and services.” Even Hugo Chavez knows that a falling dollar means he needs to get more of them for a barrel of Venezuelan oil. Mr. Chavez should call Bernanke “Mr. Danger.” Buy gold, that will show Mr. Money Machine Bernanke the worth of his play green money.
5. The US strategic petroleum reserve functions as a black hole. The US government buys oil on the open market and puts it back into holes in the ground in case of emergency. This means that my American friends are competing to purchase oil against their own government using their own tax money. Also, the uncertainty of the use of all that oil again makes oil futures uncertain and adds a premium to oil prices. Write your Congressman and demand an end to the strategic petroleum reserve, and sell the oil at prevailing rates.
6. I know my American friends don’t want to hear this, but the war in Iraq has also caused gasoline prices to rise. All those helicopters, airplanes, tanks, and trucks use a lot of petroleum which the army must buy on the global market. That means less gasoline for your cars. I won’t go into the war itself since that is a sensitive subject, but you know what they say in México, “cada quien se labra su destino”.
I hope this helps. I know it is hard to change the status quo, but every Mexican knows that government is not his friend, but my American friends think their government is holy, but in fact, it is Congress and Mr. Bush and Bernanke that have made gasoline prices so high.
Sinceramente,
Guillermo Tomás Reyes C.
Mercado Analista Global
Petróleos Mexicanos
Marina Nacional #329,
Col. Huasteca, C. P. 11311, México D. F.
(+52 55) 1944 2600
greyesc@dfc.pemex.c
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