Thursday, April 10, 2008


…is Mexico’s oil company. And I do mean Mexico’s. It is owned by the government. Has been since before World War II. President Calderon used to be the energy minister so he knows all about it.

And oil is #1 in the Mexican economy. More foreign money flows into Mexico from oil sales than any other source. #2 is remittances (and who says slavery is bad?), followed by tourism at #3.

Half of Pemex revenue goes back to the government. It makes up 40% of the money used to run the country. And four out of ten gallons of gasoline sold in Mexico is imported due to the lack of domestic refining capacity. Pemex has a bad habit of living in the present and not planning for manana.

Here’s some data to chew on to help understand why we should care. Here’s the U S crude oil data for January of 2008:
U S crude production: 157,893,000 barrels
Crude imports: 310,010,000 barrels of which these countries supplied…
…60,277,000 from Canada
…45,836,000 from Saudi Arabia
…37,148,000 from Mexico
…36,057,000 from Nigeria
…35,173,000 from Venezuela
…and just for reference 16,824,000 from Iraq
For the record, we import other petroleum products from around the world to the tune of 108,000,000 additional barrels in January.

The data:

The current debate in Mexico City has to do with Pemex and partnerships. Mexican socialism wants to keep the oil business within government but doing so limits their ability to maintain production. They need to invest in exploration and technology. A case in point is deep drilling in the Gulf.

There are companies out there who are willing to bring their oil industry up to speed, but that would weaken Pemex. Partnerships are out of the question. Maybe some sort of fees or contracts will work.

As we found out, even with an oil man in the White House, we’ve got our own troubles. Come to think of it, having oil to sell hasn’t helped alleviate suffering in many countries, has it? Kuwait maybe. Saudi Arabia (at a price). Good old Canada has probably done about as well as anyone in managing that mixed blessing.

Update: The Democratic Revolution Party donned oil rigger hard hats and stormed both houses of the Mexican congress yesterday and shut them down. The slogan is "Mexico is not for sale!" It kinda makes Washington look lame, doesn't it?

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