The Hidden Cost of Higher Energy Costs

Every month, every week, practically every day, the cost of basic utilities is on the rise in Mexico. This week ushered in gasoline-tax increase number 33 of 2008. Electricity has risen upwards of 100% this year alone, with prospects of more ahead: the front page of today's Jornada reports that although big business will, in fact, be getting a break on energy prices in the upcoming year, this is to be paid for by giving to them the subsidies that are being taken away from the public at large. Because electricity prices are pegged to the international cost of natural gas rather than what it actually costs to produce the electricity domestically, and because the government's goal is to "harmonize" (read: increase) the cost of energy in Mexico with ever-increasing global energy costs (while at the same time doing little or nothing to decrease Mexico's dependence on imported energy), expect continued monthly increases in your electrical bill throughout 2009.

Theoretically, I suppose, businesses which see their energy bills reduced will pass that savings along to the consumer in the form of lower prices. Unless they don't - and given the uncertain (at best) economic forecasts for 2009, and given that a large part of Mexico's major businesses are monopolies or quasi-monopolies, and given that the government sure won't be forcing them into it anytime soon, don't hold your breathing waiting for any price reductions. And even in the off chance that there are, the monthly surprises tucked into everyone's electric bills will be plenty enough to wipe them out.

Raising utility costs in the midst of the greatest world economic crisis since 1929 is dumb beyond belief. Higher energy costs provoke inflation in everything else, and at a time of eroding incomes, increasing unemployment and waves of immigrants returning to Mexico from the States hungry for work that doesn't exist, it's simply fuel on the fire. It would be entirely different if the gasoline and electricity hikes were being used for a massive, national investment program in alternative energy sources that could employ a swath of those returning immigrants, and others, in very worthwhile work. I would gladly pay double or triple my light bill if I saw banks of solar panels going up on every roof and light stansion, taking logical advantage of Mexico's sun-soaked climate. Or better yet, if Mexico put all its architects and engineers to work in designing and making the next generation of cheaper, more effective panels. Before the supposed failure of the "import-substitution" model (which should fairly have been called the "self-sufficiency" model, which is what it was), before Mexico became a country of piecework maquiladoras for, and adminstrators of, foreign concerns, it showed the world - three generations ago and with none of today's technology - that it could run its own oil industry just fine after the expropriation of 1938. Why couldn't it build and design its own panels now?

Therein, I fear, lies the rub. Mexico could build and even design its own solar panels if it were to want to, if the government invested even a part of what cloudy, cold Germany is pouring into solar research. The money could be found, just as money was magically found to build an oil refinery after we were told for so long that there wasn't any. What there is not is the will. The privatization of electrical energy in Mexico is now half-complete, that of oil - as we so dramatically saw this fall - temporarily aborted but the threat ever-present, and what private companies do not want is to have to subsidize (read: make accesible) the cost of their energy for the average consumer. "Harmonization" of energy prices with the volatile and pitiless international market will ensure that these energy providers will be able to make the same profits in Mexico as in the US, France and Spain, while at the same time benefiting from lower labor costs, no-bid contracts, and the same sweetheart package of tax deductions and deferrals their sister industries in other sectors benefit from now. Genuine national sovereignty can only result from genuine energy self-sufficiency, and a sovereign nation is one that is capable of making uncoerced decisions in its own national interest. And Mexico's national interest does not lie in making consumers pay more to subsidize (subsidies in this direction are apparently okay!) increasingly-privatized industries which, as time goes on, are having less and less to do with Mexico as a nation at all.