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 Business News | April 2008 
Cheaper Diesel in Mexico a Draw for Truckers on Both Sides of the Border
 Kyle Arnold & Jared Taylor - The Monitor
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| | Juan Saldaña fills up his truck with diesel at a PEMEX gas station before crossing the Pharr-Reynosa International Bridge into the United States on Thursday afternoon. (Nathan Lambrecht/nlambrecht(at)themonitor.com) | | |
Reynosa - Juan Saldaña rolled his truck into the 7-Eleven along Federal Highway 2, on his way to McAllen to pick up his trailer.
Wearing a Texas Rangers baseball cap, the Monterrey-based truck driver would have had enough fuel to make the trip there, but he decided to top off his tanks anyway.
Saldaña bought about 18 gallons of diesel for just under $38, paying 5.76 pesos per liter, or about $2.07 a gallon. Had he waited until he crossed the Pharr-Reynosa International Bridge to top off, he would have paid more than $72 for the same quantity of diesel.
More and more U.S. truckers and other motorists are taking advantage of the cheaper fuel in Mexico, according to one filling station owner in Reynosa.
Dozens of independent truck drivers from the Rio Grande Valley and as far away as Wisconsin parked their trucks at a pull-off stop along Expressway 83 in Alamo on April 1 to protest the high cost of diesel fuel - now hovering around $4 per gallon in this region. Similar protests took place along highways across the country that same day.
In Mexico, state-owned oil company Pemex distributes gasoline and diesel. Although the country opened up gasoline prices to market forces in the early 1990s, prices for diesel are still set by the government.
Looser environmental standards in Mexico also make producing the fuel cheaper there than in the United States, said Laurie Falter, a research economist with the Energy Information Administration, an independent statistical and analytical agency within the U.S. Department of Energy.
On top of the diesel price controls, the Mexican government also grants commercial motor carriers a 20 percent discount. Other drivers pay about $2.45 a gallon.
"The government asks us to buy it in Mexico," said Daniel Flores, who works for a Reynosa trucking operation.
Fuel prices have been on the rise the past five years, and diesel has been particularly susceptible to price spikes due to growing appetites for the fuel in Europe and Asia.
Vehicles that run on diesel are growing in popularity in those regions due to the vehicles' superior fuel economy compared to gasoline-powered vehicles, as well as the tendency of diesel engines to last longer than gasoline engines.
Patricia Gutierrez manages the filling station that Saldaña and other truckers stopped at to fill up before they headed for the border crossing. She said U.S. truckers and other motorists are increasingly taking advantage of the lower diesel prices south of the border.
"There are a lot who come here from over there," she said in Spanish.
North of the border, Rio Grande Valley truckers and businesses say diesel fuel has been cutting into their bottom lines.
"Of course it affects us. It's affecting everybody," said Robert Long, chief financial officer at McAllen motor carrier USA Logistics.
"And when we raise our prices, it's just passed down to the consumer."
Diesel cost $3.99 per gallon Thursday at many stations in the Valley. With prices like that, the fuel is the largest operating expense for the USA Logistics' 550-truck fleet, Long said.
Edinburg business owner Alex Hernandez runs a portable toilet company. He considered driving a tanker to Reynosa to pick up fuel for his 10-truck fleet. Unfortunately for Hernandez, though, the fuel can't be exported without paying a hefty tariff.
"I'm just trying to find a way to lower my costs," he said.
Despite the lower diesel prices in Mexico, the country has its own energy issues to deal with.
The Associated Press reported that leftist lawmakers took over both chambers of that country's Congress on Thursday to protest President Felipe Calderon's energy reform bill, which they say would open Pemex to private investment and would threaten the country's sovereignty.
Calderon says Pemex needs outside help to boost sagging production, according to the AP report. Opponents say he has been exaggerating the crisis and manipulating figures because he wants to privatize the industry, which was nationalized in 1938.
Kyle Arnold covers business and general assignments for The Monitor. You can reach him at (956) 683-4410. Jared Taylor covers Edinburg, the Delta region and general assignments for The Monitor. You can reach him at (956) 683-4439. |
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