Oil industry insiders are brushing off campaign threats made by Mexico's president-elect who vowed to halt the import of gasoline from the U.S. by 2021.
U.S. Energy Secretary Rick Perry says he supports plans to increase the Mexico's energy independence, even if it could mean fewer purchases from U.S. refineries. He met with his Mexican counterpart Thursday.
Mexico currently ships its crude oil to Texas refineries, which then ship it back as gasoline to the tune of $14 billion in economic activity.
Insiders say the threat to halt that is more bark than bite.
“They produce a lot of oil but their refineries fall far short of what they need to meet the needs of their own people,” says Phil Flynn, senior energy analyst at The PRICE Futures Group. “So I think at the end of the day, this is a negotiating tactic trying to put some pressure on the Trump administration.”
Flynn says Mexico simply cannot afford it.
“You can't look to Venezuela to send the oil or products, so where are you going to go to? China? Saudi Arabia? It's possible that could cost you more money,” he says.
“Unless they make a deal to have some of the private oil companies come in there and revitalize and build refineries, I don't think they have a lot of hope in meeting that deadline.”
The last time Mexico built a refinery was 40 years ago.