Pemex, Mexico's national oil company, is in trouble. Production is declining. More than three-quarters of all petroleum comes from fields on their last legs. Cantarell, the largest, is almost tapped out. On current projections, the country will become a net oil importer by 2016. (Joining Indonesia, whose government just recognized reality and quit OPEC.)
President Calderón has proposed a sensible (if insufficient) reform that would alter Pemex's relation with the government from that of a state agency to that of a state-owned company, with the ability to control its own investment budget and hire foreign companies to provide exploration and production-related services. It's sensible, small-c conservative, preserves national control of the oil, and rather badly needed if Mexico is to remain an oil exporter.
So, of course, the center-left PRD, under the influence of your hero and mine, Andrés Manuel López Obrador (AMLO), is fighting it tooth and nail. They forced the PAN to agree to 71 days of Congressional debate on the bill ... which will then almost certainly face a Supreme Court challenge.
And I say ... good for AMLO! Falling Mexican production means higher oil prices, and higher oil prices mean more conservation. It's better for the environment, it's better for alternative energy companies, it's better for small cars, it's better for America. Heck, it's probably even better for Mexico --- the place has done a great job of avoiding the Dutch Disease, but the federal government is gonna hafta wean itself from oil revenues someday, so why not today?
Go mismanagement of state-owned oil companies! Up with nationalization! Viva MEND! At some point those big Brazilian fields will come on line, and Iraq will get its oil act together, and who knows how much oil is in the rest of West Africa? So if you believe that $200 a barrel oil is a good thing for the world, then let's cheer on Hugo and AMLO and all the rest!
It's a dirty job, saving the Earth, but somebody has to do it.
Noel,
I was wondering if you'd be willing to do me a favor, and help me out with the economics of a TL I'm tinkering with. I'm trying to figure out the course of an alternate Depression in Germany.
And, if the answer is yes, could I get your email?
Thanks in advance,
Scott (Faeelin)
Posted by: Scott | May 30, 2008 at 04:08 AM
If one looks around the world, it comes apparent that everything that has happened in the world is also in Mexico's history-- everything that is except nuclear clouds and tsunamis. Except in Mexico it seems they get played out in Fast Forward. Every goofy scheme, every disaster, mostly self-inflicted. Just wait, as the oil fields play out over the world, imagine the turmoil!! When there is no more 'free lunch' for the politicians to play with to finance things without accountability, such as the Nanny Society in Europe, Mexico, to some degree int he US, and especially in Arabia. When the monuments being constructed in Dubai become covered in sand in a few years. Wow!
Posted by: Charlie Leonard | May 30, 2008 at 08:20 PM
[W]ho knows how much oil is in the rest of West Africa?
There were a few articles recently about how prospectors working off the Ghanaian coast had found substantial deposits of oil and (I think) natural gas. An apparently common reaction to this news was "Dear God, no."
Posted by: Randy McDonald | May 31, 2008 at 06:51 PM