July 2008 - Valero Gets Word Of 15% Cut In Mexican Supply To TX Plant; Tata Announces Nano

[hatrack]

Early this month, Valero Energy in Texas got the unwelcome news that Mexico would be cutting supplies to one of the company's Gulf Coast refineries by up to 15 percent. Mexico's state-owned oil enterprise is one of Valero's main sources of crude, but oil output from Mexican fields, including the giant Cantarell field, is drying up. Mexican sales of crude oil to the United States have plunged to their lowest level in more than a dozen years.

The same week, India's Tata Motors announced it was expanding its plans to begin producing a new $2,500 "people's car" called the Nano in the fall. The company hopes that by making automobiles affordable for people in India and elsewhere, it could eventually sell 1 million of them a year.

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What makes it unsustainable is that cheap oil has been a building block of the American economy and society, from big cars and big planes to interstate highways and commuters living in remote exurbs. For the better part of a century, U.S. policy contributed to this pattern of development. Taxes on gasoline were set aside for highways, which opened up more vistas for new communities. This in turn promoted even more driving, more gasoline consumption and more tax revenue for highways. Today U.S. automobiles use more than 9 million barrels of gasoline a day, more than any other country.

The high price of oil has sparked recent efforts by technology experts, venture capitalists, alternative energy firms and even some oil companies to come up with ways to wean the world economy off its addiction. Developing countries like China and India, however, are in no hurry to embrace this new vision. They want to join the ranks of economic powerhouses and question why they should be forced to temper their aspirations, why their oil use should be more constrained than those who came before.

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http://www.washingtonpost.com/wp-dyn/content/article/2008/07/26/AR2008072601025.html