Acapulco yet again

Ah I love Mexico.

The difference between being in Edmonton and Acapulco is stark. As I awoke at 5am and left my hotel in Edmonton two days ago, I scurried across the cold, windy parking lot in Edmonton, hands in pockets, trying to keep warm. The silence of the prairies taunting me, further reinforcing how desolate and uninhabitable a place it is. Getting to the airport people look unhealthy, most of them are hacking and coughing and no one appears all that friendly or nice.

A few hours later, I arrive in soul-healing 34c weather and arrive at my hotel overlooking beautiful Acapulco bay… the blues of the sky are deep and calming and the pulse of the aqua-blue tide is hypnotic in its tranquility. Beautiful young school girls go skipping by in their school skirts and knee high socks, giggling and flirting, alive with energy. The streets are bussling and engaged.

I order up my favorite, Al Pastor tacos, grilled to perfection on an open flame and the waiter brings over an ice-cold coca cola (is it too much to ask to get a really cold drink? It seems Mexico is one of the only places where the drinks are almost always served near freezing which, of course, is perfection on a hot, humid day). A taxi driver who remembers me, and my name, from last time I was here sees me and stops his car and comes over to visit.

Viva la Mexico.

To add to my heightened mood is the exchange rate. Most of those snarky Canadians will all tell you how awesome the Canadian dollar is, but most don’t realize that the Canadian dollar hasn’t gone up all that much versus many other currencies, or against anything else in fact, except the US dollar. It isn’t that the CDN has gone up, it is that the USD has been in a state of collapse for years now.

However, one other currency that the CDN dollar has also routed is the Mexican Peso. When I was here on my boat in 2004, the CDN/MXN exchange rate was around 8, meaning 100 CDN dollars would convert to 800 Pesos. The Peso has been on a one way train south since then however. When I was here in January of this year, the exchange rate was about 9.5. But now, only a few months later, the exchange rate is over 11. That is a 38% increase in purchasing power in the last few years… even more so when you consider that in 2002 the conversion rate was around 6, which equates to an over 80% increase!

In other words, Mexico used to be cheap, but for people who have the majority of their finances in Canadian dollar and CDN assets, right now, it is even cheaper! By a lot!

Not many people understand why the Mexican Peso has been so abysmal, but a big reason is that literally, Mexico is running out of oil. Oil from the Gulf of Mexico has been a HUGE boon for Mexico over the last few decades as they have been a major exporter to the US. However, Mexico’s big offshore oil field, called the Cantarell Field, has been in steep decline since 2004. By next year it will only be producing about half of what it did in 2004 (1 million barrels per day versus 2 million previously) and the decline will only continue.

The Mexican government, and much of the country, has lived off of the profits of oil production for years but with production declining very quickly now some people believe the impact on the country will be so great that it is quite possible the country could collapse and the government may dissolve. After that, anything can happen… so it will be very interesting in the next few years here in Mexico.

Mexican real estate is looking quite attractive because of the exchange rate but I think I’ll just keep going with the flow for a while. I am staying at the Crowne Plaza on the beach for $75/night right now… I’m sure I could get an even better rate if I wanted to stay longer term, so hotel rates are quite reasonable right now too. Although, it is important to point out that it is low season here right now (rainy season.. it doesn’t rain much but every night for about 30 minutes there is usually a pretty huge tropical thunderstorm)… also, the Crowne Plaza in Acapulco is pretty old and not up to the standard of many of their other hotels… so that also explains the price a bit. But considering that I was paying $120/night in Deadmonton just a few days ago to stay at a hotel near a highway in the desolate, cold prairies and am now paying $75/night to stay at a resort on the beach in Acapulco, I’m not complaining!

I’m off to go get some more tacos. Ciao!