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 Business News | June 2008 
Low Mexican Gas Prices Draw Americans
 Adam B. Ellick - New York Times
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| | George Terrazas of El Paso made it a point to go to Ciudad Juárez, Mexico, the other day so that he could buy $2.66 gasoline. (Bruce Berman/New York Times) | | |
Ciudad Juárez, Mexico — When George Terrazas was mugged at gunpoint in this Mexican border city several months ago, he vowed never to return.
That, however, was before gasoline hit $4 a gallon in his hometown, El Paso, just across the border.
On Saturday, Mr. Terrazas was back in Ciudad Juárez, wooed by its irresistibly low-priced gasoline — around $2.66 a gallon — even if not quite unfazed by the indiscriminate gunfire from dueling drug cartels that has contributed to a 2008 average of three killings a day in the city.
“I don’t feel comfortable here,” he said, “but I can’t even fill the tank on the U.S. side.”
Mr. Terrazas, a 48-year-old maintenance worker, is among a flow of American “gas tourists” who, Mexican service stations near the border with El Paso estimate, account for a 50 percent surge in gasoline sales here over the last several months. (Similar increases are reported along the border all the way to Tijuana.) Even the Mexico Tourism Board is promoting the journey.
At the Servicio Herrera service station here, the manager, Jorge Salinas, estimated that Americans were now 30 percent of his customers. They arrive at all hours, Mr. Salinas said, from 6 a.m. to midnight.
On his visit Saturday, Mr. Terrazas saved about $20 filling his 1990 Oldsmobile Cutlass Ciera. He said that when he returned to El Paso, he would monitor the bridge traffic from his house, and that once it waned, he would come back to fill his other vehicle, an S.U.V., for an even bigger saving.
And while here he would pick up six-packs of Tecate beer and produce like passion fruit, and even visit an orthodontist. In all, he expected to save $200. The border, he said, flashing a mouthful of braces, is “our advantage.”
The low gasoline and diesel prices that draw Americans here are a result of subsidies provided by the Mexican government to curb inflation and make fuel affordable to the poor.
The moment may not last. Severe gasoline and diesel shortages, caused by the increased demand from Americans and delivery problems as well, have been reported from here to Mexico’s border with California. (On Friday the government-owned monopoly oil company, Petróleos Mexicanos, or Pemex, said that it would provide a one-time allotment of an extra 300,000 barrels of diesel fuel to meet increased demand along the border.)
Moreover, experts question how long the government can continue providing gasoline subsidies, which will amount to more than $20 billion this year.
For now, though, many South Texans are buying all the fuel they can south of the border, and little wonder. Four of the seven poorest urbanized counties in the United States are along the Texas border, including El Paso, according to a 2006 Census Bureau report.
El Pasoan desperation shows in the leathery face of Jimmy Gann, 57. Mr. Gann’s employer, a family trucking business, is on the verge of bankruptcy, he said, and to help the owners stay afloat, he makes three 32-mile round-trip sprints across the border each day. Once here, he fills a 100-gallon tank with diesel — which is going for $2.20 a gallon on this side, compared with $4.55 on the other — then returns north, unloads the tank at his employer’s business and does it all over again.
One Texan in the trucking industry, who declined to give his name for fear of being prosecuted for tax evasion, said he saved $12,000 a month by fueling his four-truck fleet in Mexico.
On the El Paso side, service station employees say business is down about 40 percent, even at a Chevron station that may have the best deal in town: gasoline at $3.89 a gallon. Just two months ago, stations on the Texas side attracted many Mexicans, who crossed to buy what they considered higher-quality gasoline that was more expensive but still affordable.
“We keep saying, ‘Have you seen so-and-so?’ and the answer is always no,” said Rocio Salazar, 30, a station attendant in El Paso. “It used to be like rush hour on the freeway in here.”
The drop in business has made all the worse along the Texas border what were already hard times for many owners of American service stations. The spike in gasoline’s price has caused many customers to cut back, and that, coupled with increased fees of credit card companies, has “put an increasing number of retailers on the brink of bankruptcy,” says the National Association of Convenience Stores, which represents convenience and petroleum retailers in the United States.
Jose Alfredo has worked at a Chevron station in El Paso for 18 years. With no convenience store to cushion a 50 percent drop in business, the station has laid off five of its eight employees.
“Everyone knows Mexican gas is watered down, but customers don’t care anymore,” Mr. Alfredo said with a shrug.
Managers of Mexican stations deny that accusation. They also say that most of the gasoline they sell is refined in the United States. But one American oil executive noted that the sulfur content allowed in gasoline by the Mexican government was higher than what is allowed in the United States, and said that over time, the higher level could compromise vehicle emissions systems. In addition, Mexican refineries lack a capacity to produce low-sulfur diesel, which is standard in the United States.
The Mexican diesel is “not a good thing for the air, but it’s a good thing for people who want to save money,” said Tom Kloza, a chief analyst at Oil Price Information Service.
Edith Marquez is one American who has so far resisted buying Mexican gasoline, citing quality concerns. But she visits Juárez every Saturday for the $15 saving at a weight control doctor, whose office is attached to a Pemex station. “I’m afraid for my car, but I’ll let the doctor here put vitamins in me,” Ms. Marquez said with a laugh.
For gas station attendants in Mexico, who earn $100 a week, the surge in sales has meant extra money to tuck into the pockets of their olive green overalls. To tip attendants is the custom here, and one of them, Alejandro Jurado, flashing a brick-size wad of pesos and dollars, said, “Americans tip better.” |
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