Mexico's Leader Could Open Up Oil Industry, Be Known For More Than Violence And Tequila

Categories: Texas

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Once upon a way-the-hell-back when, Mexico wasn't just the land of tequila, pretty beaches and drug cartels to all of us across the border.

It was also the land of oil -- and technically still is -- but that's a fact not remembered too often since the government took over all things oil more than 70 years ago. Now Mexico may be in the mood to remind the world Mexican oil is as much a thing as tequila.

In the first decades of the 20th century, Mexico was a place gushing with oil and crawling with American oil men looking for oil fields, drilling wells and cashing in as they got the wells flowing. They brought with them the expertise honed in working the plays across the border in Texas and Pennsylvania and all the other places oil was booming back then.

Anyway, the American oil people brought their expertise over and got the Mexican oil plays going, where the Mexican explorers had failed. This kicked off an oil boom in Mexico and set things up so these foreign companies dominated the Mexico energy market for more than 20 years. As they rolled into the 1930s, Mexico was the second largest oil producer in the world and everything was going great. (Check out Daniel Yergin's The Prize if you've a hankering for a more in-depth explanation of how this all went down.)

The Great Depression changed all that, with oil selling cheaper than water in some parts of the world and political instability rocking through Mexico. Throw in a hefty doses of nationalism and the realization that all the oil business was being run by foreign companies who didn't treat the local employees so well, and it was a situation ripe for change.

The overhaul came in 1938 when President Lazaro Cardenas nationalized oil, creating a government monopoly on the industry, booting foreign oil outfits from the entire process. That's how things have stood for more than 70 years, but now change is afoot.

President Enrique Peňa Nieto is proposing opening the door to allow foreign companies to work with the government controlled company, Pemex. While Mexico is still one of the top producing countries in the world, the actual production numbers have been slipping for years and the country is due to become a net energy importer by 2020 if something doesn't change, according to the Los Angeles Times.

Opening up Mexico to oil companies is like putting a pot of honey in front of a hungry bear, and there's almost no doubt the companies will take the bait if the measure gets approved. If Mexico lets all of those foreign oil people in (like, you know, the ones around here) Mexico has a shot at revamping its industry and itself. Maybe it will get to be the land of cheap tequila, sandy beaches, cartel violence and -- considering oil is kind of what Houston does -- Houston oil people. If you're an into oil and cheap tequila, it's a win-win.


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2 comments
wcvemail
wcvemail

Peňa Nieto shows courage and political will in advocating and leading this change. Given the nationalism and protectionist beliefs of the PEMEX unions in particular, rooted in the very-big-deal populism that inspired the 1938 nationalization, opening the national industry carries the same national, political impact of, say, immigration amnesty in the U.S. The Mexican industry has been in need for over a decade, and this has been mooted in some opinion columns, but the groundswell is against the move. Good luck to Mexico. 

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