Gas Tourism

I've written before about how most developing countries have even more screwed-up energy policies than we do -- with the government expending large sums of money on environmentally destructive gasoline subsidies that are almost always regressive in the context of a poor country. One consequence of this that I hadn't considered, but which makes sense as soon as you think about it, is that if you live in the American Southwest you can head south of the border and fill up on cheap gas:

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.”

Things like buying passion fruit and an affordable orthodontist are conventional gains from trade, and ought to be encouraged but the kind of subsidy arbitrage represented by the gas issue isn't all that awesome. The good news, I suppose, is that this may put pressure on Mexico to start phasing these subsidies out.

Comments

When I visited a Mexican border town it seemed that all the gringos were there to get haircuts and visit the dentist. I don't know what that says about American and Mexican dentistry, but compared to other aspects of health care American basic dentistry isn't all that expensive. Does Mexico have a glut of underpaid expertly trained dentists? Or is orthodontics really just overprice here in the states? Anyone?

Posted by freddiemac | June 25, 2008 9:38 AM

Before the paranoid obsessive Kellybot crawls out from under the bed, it's worth noting that the border has been used to Americans' pharmaceutical advantage for a long time. Gasoline is just another drug that people don't want to quit cold turkey.

Posted by pseudonymous in nc | June 25, 2008 9:39 AM

The good news, I suppose, is that this may put pressure on Mexico to start phasing these subsidies out.

Well, I guess "good news" might include the kinds of society-wide, ungovernability chaos we've seen in lots of other South and Central Americans that probably would be really nasty to see in our actual border neighbor. Sounds like fun!

Posted by El Cid | June 25, 2008 9:42 AM

Can you bring fruit back across the border from Mexico? Or is he swallowing balloons full of diced passion fruit?

Posted by Jake H. | June 25, 2008 9:52 AM

Do Mexicans drive many Expeditions or Navigators? I think not. Their prices for gas are in line with their economic reality. Exporting US economic norms without exporting the US economy is not going to be very helpful.

Perhaps the US should adopt European gas pricing. Americans can more likely afford this than Mexicans can afford US-priced gas.

Posted by zozie | June 25, 2008 10:09 AM

Matt,

You're nuts. Your country, once a breadbasket of the world, awash in moderate weather, subsidizes the hell out of agriculture ... and you want to castigate Mexico which (because you're an unprincipled economic behemoth) has neither comparative nor competitive advantage in any production but petrol, and subsidizes the cost of gasoline for the people you help impoverish?

Zozie has it right.

Worse, you have a Department of Energy which your Republicans have tried to abolish numerous times, and you have no national energy plan. You have a secret plan that Cheney and the oil companies know something about, but that's their plan and likely will advantage them, not you.

Aside from the fact that France and Germany are less dependent on oil imports than you are, when you put Bush in office, your country imported 60% of its energy needs; now it imports 65% of its energy needs.

I must have missed something when you were talking about your plan.

Regards,

Posted by /ehj2 | June 25, 2008 10:46 AM

the kinds of society-wide, ungovernability chaos we've seen in lots of other South and Central Americans

Sorry, meant to say "lots of other South and Central American nations," not that South and Central Americans are supposed to be "governable" and non-chaotic as individuals, since I myself would certainly fail a chaoticity test.

Posted by El Cid | June 25, 2008 11:07 AM

Living on the Mexican border also comes in handy for steroid users. In Mexico, 'roids are legal, readily available, and quite reasonably priced, and so long as you use them in Mexico and don't bring them across the border there is nothing illegal.

Posted by Peter | June 25, 2008 11:15 AM

I take my gas tours in NJ ($0.35 less than NY last Sunday).

Posted by JSG | June 25, 2008 11:34 AM

Back in the 80's we used to drive from San Diego to Mexico to fill up on diesel. We had an extra tank installed in the trunk so we'd buy about 50 gallons per trip.

Of course, we often spent all the money we saved on gas to buy a fancy lobster dinner in Mexico :-)

Posted by MarkT | June 25, 2008 12:32 PM

I was in Mexico about a month ago, and asked one of the locals if Americans were taking advantage of the cheaper gas. He said that they didn't, since the Mexican gas is of lower quality. So, while I'm sure some do, it doesn't seem to be a widespread phenomenon.

Posted by Eric B | June 25, 2008 12:49 PM

"...this may put pressure on Mexico..."

Hilarious, Matt. Recently more people have been killed in border drug-gang shoot-outs and drug-bust induced nightclub stampedes in Mexico than by Al Qaeda, and Mexican subsistence farmers are facing famine because of US ethanol subsidies. Great, let's put more pressure on Mexico! Fuckin' A! What's next, air strikes?

Posted by robert powell | June 25, 2008 12:53 PM

It would seem that Oil rich countries should be trying to minimize their domestic consumption as much as possible. You have a resource that is one of the most desired commodities on the world market with prices increasing rapidly, every gallon you consume domestically is one less gallon to sell.

Posted by eric k | June 25, 2008 3:24 PM

It would seem that Oil rich countries should be trying to minimize their domestic consumption as much as possible. You have a resource that is one of the most desired commodities on the world market with prices increasing rapidly, every gallon you consume domestically is one less gallon to sell.

Posted by eric k

Sounds great, until you have to think of it from the point of view of governments of people barely able to survive at the domestically subsidized price level.

Maybe such governments can put forth better models of helping people who can barely afford to keep the children fed as it is than keeping fuel prices low -- some sort of other social assistance in exchange for selling more oil internationally at higher prices -- but none of it appears easy to do, and few Mexican citizens would trust their government when it promised such an exchange.

Posted by El Cid | June 25, 2008 3:37 PM

The Mexican government is currently trying to pass a mild reform of the oil production business and is running into a hurricane of opposition. Cutting subsidies concurrently would be utterly infeasible politically. But from an MY-rationalist perspective, the other primary reason for the subsidies is inflation: Mexico aims for about 3% but has reached 5% over the past year. Subsidies can be pretty helpful in tamping down short-term inflation, at least for a product as fundamental as gasoline. The Calderon administration is pretty damn neoliberal by instinct and would probably be happy to cut the subsidies in principle but both politics and short- to medium-term economics say it ain't happening.

Posted by jake | June 25, 2008 4:37 PM

Here in Singapore, we're just a bridge away from Malaysia, where gas is much cheaper because of Malaysia's subsidization. There was talk recently of Malaysia requiring gas stations near the Singapore and Thai borders to have two sets of pumps, one for Malaysians and the other, at market prices, for foreigners. One politician said he favored the idea because it would help Malaysians understand the true price of gas. Having them actually pay the true price would apparently lead to a bit too much understanding.

Posted by AngMoh in Singapore | June 25, 2008 11:01 PM