Upping the oil ante. (New Business).

Mexico raised its crude oil exports for the second time in as many months in mid-January, filling the vacuum in the market caused by the Venezuelan strike.

The prolonged strike, which has put President Hugo Chavez' leadership future in doubt, has sent world oil markets into a state of volatility due to the lost supply from the major Latin American oil producer. Venezuela ranks with Saudi Arabia, Mexico and Canada as the top supplier to the world's single-largest oil market, the United States.

After an emergency OPEC meeting on Jan. 12 in which the cartel agreed to increase output 7% (or 1.5 million barrels per day), non-OPEC member Mexico reacted by also announcing an output increase. Starting Feb. 1, Mexico began exporting 1.88 million barrels per day, an increase of 120,000 bpd.

In a statement released Jan. 13, the Energy Secretariat said, "In the past few days the assessment of the oil market fundamentals by the main crude producers shows the measures adopted at the end of 2002 to reduce the market tightness have not had the expected positive results due to the growing instability in world supply and the consequent price volatility."

In December, Mexico upped its output by 100,000 bpd.

HAVE A MERGE AND A SMILE

Coca-Cola Femsa last month announced plans to buy the Miami-based Panamerican Beverages for about US$2.7 billion plus debt, thereby becoming the top Coke bottler in Latin America.

Panamerican Beverages is the largest soft drink bottler in Latin America. The combined company will have estimated annual revenues of US$4.6 billion.

Reactions were mixed to the deal, which was seen as better for the Miami-based bottler than Coca-Cola Femsa. Although Coca-Cola Femsa undisputably becomes a soft-drink powerhouse in the hemisphere, with the deal it does take on a large amount of debt in addition to its generous purchase price.

STRUGGLING PESO

Largely attributed to worldwide nervousness regarding a possible U.S.-led war in Iraq, the peso tumbled precipitously against the dollar in January.

By Jan. 17, the currency had softened to 10.62 pesos per dollar, versus 10.56 the previous week and 10.40 the week before.

NEWS FLASH: UNCERTAIN FUTURE

In what may qualify as a statement of the obvious, Banco de Mexico Gov. Guillermo Ortiz said that the future of the economy over the course of 2003 is unclear.

In an address to an academic audience last month, the nation's top economist cited a few specific factors that contribute to this uncertainty: possible war in Iraq, trouble in the Middle East in general, the volatility of world oil prices and a stutter-step economic recovery in the United States.

"The big picture is complicated, with a high degree of uncertainty, and these four factors are going to determine the performance of the Mexican economy," Ortiz said.