by Kelly Simmons, Managing Editor and Senior Writer
The startling increase in natural gas prices on both sides of the U.S.-Mexico border, in combination with record low temperatures since December, has caused a crisis for consumers and business people, who have seen their heating bills double and sometimes triple within a month. Reports on the price of natural gas and consumers' high bills have dominated the news on the U.S. side and the Mexican side of the border for much of January and February.
Large protests in Ciudad Juarez and Chihuahua City have been occurring with hundreds of customers demanding subsidies from the government and refusing to pay their bills. Thousands of Mexican consumers have flooded the Office of Consumer Protection (Profeco) with complaints and protests. On the U.S. side, phone lines to the Southern Union Gas Company, which services southern West Texas, were jammed for nearly a week as customers attempted to call in and complain about the huge hike in their bills. Company officials estimated the offices were receiving 7,000 calls per day.
But according to representatives from the Southern Union Gas Company, the increase on the U.S. side is due to higher prices charged by their suppliers and is not due to any increases on their part. According to an El Paso Times report, natural gas prices across the nation are higher than they have been in 15 years. Even so, El Paso Mayor Larry Francis has called for an audit of the Company in response to the public outcry over heating bills.
On the Mexican side of the border, El Norte reported that the price of natural gas went up 20% from mid December to mid January, from 1.28809 centavos per cubic meter to 1.53985 per cubic meter and between October and January 1, the price of natural gas rose nearly 50%. Meanwhile between 500 and 800 protesters where demonstrating daily outside the offices of Governor Francisco Barrio in Chihuahua City seeking his intervention in the crisis. In other protests, members of the militant El Barzon group attempted to take over a gas truck to distribute gas to people in one of the city's colonias. In the ensuing confrontation, a company guard teargassed the crowd and police were called in. The guard was arrested and the police broke up the protest. The incident marked the first violence in otherwise peaceful protests on the issue. In addition to El Barzon, numerous social, political, consumer and business groups have complained, sent letters and protested to PEMEX and gas company officials, Profeco, the Governor and even President Zedillo.
Consumers and business people have charged the natural gas and propane suppliers with price gouging and have demanded an investigation by Profeco and others. Business leaders, along with the Industrial Chamber of Commerce (Canacintra) petitioned the National Commission on Prices for a preferential subsidy during the winter months. According to a study performed by Canacintra, the price of natural gas has gone up 500 percent for commercial use since 1990 and 700 percent for residential use.
In October 1995, the national Commission on Energy Regulation (Comision Reguladora de Energia, CRE) solidified plans to removed federal price limits on natural gas. The action would enable gas companies and PEMEX to make more profits and in turn provide capital to fund the improvement of petroleum infrastructure. With the current crisis in prices, the Commission's actions as well as plans to enact a standardized maximum price with the United States and Canada have come under scrutiny. Critics charge the plan will provide big dividends for petroleum companies and not necessarily benefit consumers. Under the plan, the Commission and the National Petroleum Company (PEMEX) have devised formulas to use in order to determine what prices the gas distribution companies (gaseras) may charge. Efforts by community leaders and activists to uncover these formulas and PEMEX's wholesale prices, in order to calculate the gaseras' profits, have been unsuccessful.
Meanwhile, Governor Barrio announced in mid-February that the protesters' proposal for a price subsidy or other discount from PEMEX to help with natural gas bills was impossible. He said the reason prices are high is due to the highest prices in eleven years on the international market. However, he did propose the possibility of a deferrment of payments to later months. Meetings between gas distribution companies and numerous protest groups, including the maquiladora association, several chambers of commerce, El Barzon and Women for Juarez were unsuccessful at reaching any agreement. At the same time, gas distributors on both sides of the border began announcing a 30 percent decrease in gas prices beginning in February. Officials stated that consumers may not see that decrease reflected in their bills until March.
Finally, efforts by gas distribution companies in Ciudad Juarez to cut off the gas supply to residents who did not pay their bills was met with opposition. Customers threatened to blockade company doors to prevent workers from leaving to go out and shut off services. Profeco warned the companies that any shut-offs would mean 400 peso fines per incident. After numerous complaints by customers that their gas had been shut-off, Profeco warned the companies to stop the shut-offs and reconnect customers or the police would be called in to intervene. If the warning is not followed, Profeco has threatened more economic sanctions. The prohibition on shut offs appears to be temporary until a settlement between the companies and community groups can be worked out.
Sources: El Norte, Diario de Juarez, El Paso Times.