Oil politics have recently bubbled to the surface down in Mexico. Seeing as the country was our second-biggest supplier last year, we gringos had better pay attention.
Over the past week, a controversial energy reform package has been approved by the Mexican legislature to increase the state oil monopoly's independence in various ways, including its contractual flexibility with foreign companies. It's arguable that very little will change under this bill, but the mere whiff of privatization was enough to send the opposition into the streets.
The exploitation of Mexico's oil wealth has long been a sticky issue. The debate traces back about a century, to the days when Mexico's earliest oil discoveries made the country one of the most promising exploratory regions in the world. Royal Dutch Shell
To this day, Mexico's national oil company, known as Pemex, remains the only game in town. Only the state is allowed to process and distribute oil and natural gas. Petrobras
Mexico desperately needs to have the knowledge of companies like Chevron
The International Energy Agency concluded several years ago that Mexico, absent a major overhaul, was headed for net oil importer status by 2030. Other estimates place this reversal somewhere in the next decade. The government leans heavily on Pemex for tax revenue to fund its social programs. Without those exports, things may get ugly, fast.
Bringing it back home, the evaporation of Mexican oil exports would be a real double-whammy for America. Not only would we lose a geopolitically palatable supplier, we could also have a seriously destabilized nation right at our doorstep.
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