The Carter administration's forthcoming decision on pricing Mexican natural gas imports is fraught with politicai dilemmas, placing the President and Energy Secretary James R. Schlesinger in a three-way squeeze between Mexico, Canada and domestic gas producers.
Administration and banking officials admit in private that the total cost of producing and shipping the gas - as well as paying for the $1.5 billion, 850-mile pipeline is about 35 cents per thousand cubic feet. But the U.S. pipeline companies buying the gas from Mexico will be asking the federal regulators to approve a price pegged to imported oil products - now about $2.60 per thousand cubic feet - that would be readjusted upwards quarterly.
If Carter's regulators agree to the $2.60 price for Mexican gas crossing the border at McAllen, Texas, they will face a strong appeal from the Trudeau government on behalf of Canadian producers now selling gas to American pipelines for about $2.16 per thousand cubis feet.
The loudest screams, however, are already in the air. Domesting producers, led by Texas oilman Geroge Mitchell have blasted the Carter administration for courting high-priced Mexican natural gas while strongly opposing deregulation of new natural gas at home. "Here is a proposal to buy national gas from a foreign country, but nothing to let us expand - approval of imports would point up the absurd consequences of the Frankenstein Monster our government has created in trying to control gas prices," Mitchell said.
The Mexican natural gas project, needless to say, will be one of the most profitable undertakings in the country's history. Investment bankers say the project will pay for itself in two to three years, and earn billions of dollars of foreign exchange.