Amid uncertainty over whether President Donald Trump will impose a 25 percent tariff on Mexico and Canada, the announcement of taxes on algae and Mexican and Canadian oil starting February 18 adds to the situation. This action could affect the oil refinery of Petróleos Mexicanos (Pemex) located in Deer Park, Texas. Although the refinery is in the United States, it processes crude oil from Mexico and the international market, with the goal of selling gasoline and diesel in our country.
The Deer Park refinery was purchased by former President Andrés Manuel López Obrador on January 21, 2022, for around 600 million dollars. It has a capacity to process 320,000 barrels of gasoline daily. Ramsés Pech, a partner at Caraiva and Asociados-León & Pech Architects, considered that the Deer Park refinery would be the big loser from this measure as it relies on the oil sold by Pemex.
Pech mentioned that if Deer Park has to pay tariffs on oil imports, the cost of its raw material will increase, which will raise the cost of the final product. Approximately more than 90 percent of the hydrocarbons produced at Deer Park stay in the United States, so if it offers higher prices than other refineries, it could be pushed out of the fuel market in U.S. territory.
On the other hand, Mexican crude oil exports have reached their lowest level in 35 years, with a 37 percent decrease in January compared to the previous month, down to about 577,000 barrels daily. This decline has led U.S. fuel manufacturers, the main buyers of Mexican oil, to seek alternative supplies from Canada and Colombia.
Petróleos Mexicanos (Pemex), the world's most indebted oil company, has been producing less while trying to pay its suppliers. Pemex's debt complicates its production and has led to supply shortages, which will cause a decline in production in 2024 for the first time in five years, according to preliminary data from the company. The President of Mexico, Claudia Sheinbaum, has mentioned that Pemex's outstanding balances should be settled in March. In November, some contracts were temporarily suspended while they were being evaluated, and the company was working on a payment plan.
