# Inflation...



## MangoTango (Feb 8, 2020)

We finished up a small piece of our ongoing roofing project this weekend. Materials are getting very expensive. Last week they had a sale on 7 year Impermeabilizante. 25% off. So now the normal price for a 19L pail is close to 2000 pesos. That is getting rather pricey. I did not realize there was a sale on until I got home. I had them deliver another 10 pails this morning (at the sale price) for when we finish up the roof when the rains stop (November).

Today is garden day for us. We have a young (39 year old) guy who comes by and helps me out on Tuesdays. We needed some dirt so we visited our normal source where they sell bags of dirt. This week the price has risen from 20
to 25 pesos per 50-60 lb (or so) bag. Dirt with leaves (for plants in pots etc). has risen from 30 to 45 pesos. That's a little pricey as well.

SO - at the end of the day - since everything is getting more expensive we gave our gardener a raise. From 500 to 600 pesos for a 6 hour workday. He is a great guy, always on time, and I can trust him with the keys to the house.


----------



## MangoTango (Feb 8, 2020)

Energy costs are going up.
We are fortunate that we have solar panels which really makes our CFE costs lower but when it get cloudy (like now) we don't make as much energy.
Per kwh : Feb 0.853, Apr 0.857, Jun 0.861. And that is the basic (lowest tier rate).
Natural gas is going through the roof.

I read an article somewhere this week that Mexico has purchased 100% ownership of a Houston based refinery which is supposed to assure Mexico's energy independence going forward. Those savings/results are supposed to kick in in 2023.


----------



## eastwind (Jun 18, 2016)

The refinery was originally owned by Shell. In 1993 Pemex bought a 50% stake in the refinery for $200M. This deal, for $600M, is for the other half not already owned by Pemex. 

Whether it's a good deal depends on how you look at it. On the one hand, $200M in 1993 is worth $369M now (I used an inflation calculator), so they are paying 62% more (600M vs 369M) for the second half than they did for the first, and the facility is 28 years older now than it was then!

On the other hand, Pemex is said to be spending a total of US$9B to build a similar refinary in Dos Bocas. (The announced/assigned budget for the first year of construction, 2019, was 50B pesos).

So it makes the Dos Bocas refinery look really really expensive. But I suppose there are capacity/throughput factors to consider as well. Maybe the Dos Bocas facility can refine a lot more per day. (One hopes, anyway).

I read recently that Mexico announced the official rate of inflation for the past year at 6.something percent (6.2? 6.3, memory is blurry). Turns those 4% CETES into losers.


----------



## MangoTango (Feb 8, 2020)

6.08 - for the month of April 21 - 3.76 for the month of Feb 21.
Banxico, central bank, Banco de México
I was actually looking at UDIBONOS (out of the corner of my eye).

Todays 4.82 for a 1 year CETE is still a lot better than a 1 year T-Bill (0.02 ?)
And - on average - I think my CETEs have out-performed inflation.

I don't know what the components of the Mexican CPI are. Do you ? I think it includes energy.
Doesn't the US CPI exclude food and energy ?

I'm not an economist and all those official numbers for inflation are fishy to me. On a recurring basis I care most about food (including Costco), materials (like I mentioned in my initial post) and medical. Our other expenses; my dirt, CFE, internet and phone etc are trivial. Someone should come up with a quick and easy Personal CPI calculator. I'm sure it would differ as much as our DNA.


----------



## eastwind (Jun 18, 2016)

US CPI is reported two ways, CPI and "Core CPI", which is CPI excluding food & energy. The core number is less volatile.

Starting back in the Reagan administration, the US CPI numbers have been subjected to "adjustments" that many people think understates actual inflation. The most recent change to CPI was to stop using the cost of owning your own home in the index and instead use a cost related to renting.

Mexico has less in the way of motives for understating their inflation, but Mexican CPI may also be understated. 

But if they tell you it's 6%, it's not lower than that.


----------



## AlanMexicali (Jun 1, 2011)

eastwind said:


> The refinery was originally owned by Shell. In 1993 Pemex bought a 50% stake in the refinery for $200M. This deal, for $600M, is for the other half not already owned by Pemex.
> 
> Whether it's a good deal depends on how you look at it. On the one hand, $200M in 1993 is worth $369M now (I used an inflation calculator), so they are paying 62% more (600M vs 369M) for the second half than they did for the first, and the facility is 28 years older now than it was then!
> 
> ...


The original cost of Dos Bocas by the Mexican government was 6 billion dollars recently they stated it will cost $9.5 billion and be finished in 4 years but international companies who build them all stated it will cost $17 to 18 billion and take between 8 to 9 years to built. It is more sophisticated and specialized than the older Deer Park refinery and will need to mix light sweet crude oil bought elsewhere to mix with Mexico's heavy crude to make gasoline, diesel, and propane as does all Mexican refineries. Heavy crude can only make lubricants alone. A poor investment and hiding the cost and time to build it is called corruption. They have injunctions to not reveal the details of all costs and accounting for 10 years as do they have with the Santa Lucia airport and the Mayan train.


----------



## MangoTango (Feb 8, 2020)

Yes - I am not a political creature but I started to do some research on what the June 6 ballot looks like.
I came across a site with a pdf file available. Did you know that there are at least 19 political parties in Mexico ?
The pdf file was over 200 pages in length.

We have some intelligent Mexican friends and they tell us to just vote PAN and get Morena out of power, but predictions I have read is Morena will win in a landslide.
I still need to do more research.


----------



## Isla Verde (Oct 19, 2011)

AlanMexicali said:


> The original cost of Dos Bocas by the Mexican government was 6 billion dollars recently they stated it will cost $9.5 billion and be finished in 4 years but international companies who build them all stated it will cost $17 to 18 billion and take between 8 to 9 years to built. It is more sophisticated and specialized than the older Deer Park refinery and will need to mix light sweet crude oil bought elsewhere to mix with Mexico's heavy crude to make gasoline, diesel, and propane as does all Mexican refineries. Heavy crude can only make lubricants alone. A poor investment and hiding the cost and time to build it is called corruption. They have injunctions to not reveal the details of all costs and accounting for 10 years as do they have with the Santa Lucia airport and the Mayan train.


Corruption on the part of the Cuarta Transformación? I'm shocked, I tell you, shocked!!


----------

