Mexico’s Oil And What It Means

David Simmonds

Mexico, as most of you know, has a monopoly state-owned oil business called Pemex. Those are the only gas stations you see in the country, with its signature green and white colors, where the price of a gallon runs about $2.50 right now. Most of Mexico, according to the polls, want to keep their oil out of private hands, particularly those attached to foreign arms. Based on past history, back when U.S. oil companies controlled all of the Mexico oil (Rockefellers, Getty, etc), it is understandable that they are gun-shy about this happening again.  Mexican oil has become a symbol of independence and national pride, and for a country that lost nearly one-half of their land mass to their northern neighbor, it is no small matter. Mexico is the 6th largest oil producer in the world and the No. 3 supplier to the U.S.

So when President Calderon presented a new set of energy reforms that would begin to allow some periphery involvement by gringo companies, the frijoles hit the fan. The leftist PRD took over the podiums in both houses of Congress in protest for two weeks until the PAN ruling party agreed to a substantive debate on the issue.  And then yesterday there was a 15,000 person protest march throughout downtown to Mexico City’s zocalo, led by Andres Lopez Obrador, who narrowly lost the last presidential election.

Calderon, and others, claim that it is necessary to bring in more advanced technology to drill six-miles deep in the Gulf of Mexico, where there are believed to be large, untapped oil reserves, and to increase refinery capabilities. The opponents envision a slippery (oily?) slope that will result in Mexico losing it’s most valuable resource. Once that doors opens it would be nearly impossible to close.

Stay tuned as this story develops. It is a major issue that will help determine the future of Mexico and its people. At $115 a barrel and rising as the world sucks every last drop from the ground, the stakes are enormous.