| | |  Business News | August 2009 
Mexico: Falling Oil Could Greatly Worsen Recession
 Associated Press
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August 12, 2009
Mexico City - Mexico's finance secretary is warning that falling oil production and prices may push the already cash-strapped nation into its worst economic recession in 30 years.
Mexico's state-owned oil company Pemex currently pumps about 2.6 million barrels a day, down from about 2.8 billion a day last year, Finance Secretary Agustin Carstens told a Senate committee Tuesday. Carstens said he expects output to slide to about 2.5 million barrels a day next year.
Mexico is the third-largest oil supplier to the United States but its reserves are drying up, and Petroleos Mexicanos has been slow to explore deep-water deposits.
Even with the declines in output, oil revenues funded 40 percent of Mexico's budget last year. The government protected oil income this year by hedging prices at $70 a barrel. But those guarantees aren't in place for 2010, Carstens said. He forecast 2010 export prices of $53 a barrel.
Carstens said the combined drop in revenues and production will force Mexico's economy to lag behind an anticipated global economic recovery in 2010.
Mexico sends 80 percent of its exports to the United States and has been hard-hit by the slowdown in the U.S. economy. It also has seen a huge plunge in the amount of money Mexican migrants in the United States send home.
The central bank says remittances - Mexico's second-largest source of foreign income after oil exports - plummeted nearly 18 percent in the second quarter of 2009 compared to the same period last year. |
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