This article from The New York Times, Mexico's Oil Politics Keeps Riches Just Out Of Reach, talks about how Mexico's readily accessible oil is disappearing, and how the politics of Mexico is keeping Pemex from advancing to find the oil deep under the Gulf and under ground.
Mexico has been one of the top oil exporting countries of the world, and there is a great pride found in the 1938 law removing any and all foreign investors (because of this, March 18 is a civic holiday). But now as Pemex, Mexico's top oil company, has found itself slowing production by immense amounts, people are starting to worry about the future of Mexico's oil industry. Canterell, Mexico's largest oil field, has dropped production by about 50% in the past years, and many people are afraid that Mexico, who takes in 30 to 40 percent of their national revenue from oil, will be forced to start importing oil in the next decade.
Many researchers believe that the oil is there, beneath the land and deep in the Gulf of Mexico, but Premex just doesn't have the technological necessities or the money to reach it. Extracting oil from deep beneath the ocean is costly and risky, most companies find partners to share the financial risk with. The problem is that the Mexican constitution does not allow foreign investors to take any profit from oil they help find so no foreign partners are given any incentive to help. One water rig from deep in the ocean can cost $365 million a year to operate, and without outside help, Mexico's oil industry is going to suffer even greater catastrophe.
President Calderon has made some reforms to help Pemex and the oil industry, but the nationalistic view that the people have of Mexico's 1938 law, and the wish to keep foreign business out has stalled much of Mexico's needed technological advancement. Pemex has long been "a symbol of nationalism and sovereignty", but with this lag in oil production, it might cause Mexico to go into an even worse economic recession.
This article is important to look at in Comparative Government because it refers to Mexico's national belief in the Dependency theory, that foreign business and investors need to be kept out so that local and state businesses can develop. This also poses as a huge economic problem for Mexico. If one of it's main sources of revenue goes under, than the following economic crash will cause major civic unrest and political upheaval. it will be important to see how this plays out, and how the government deals with the problems of the drug war, growing poor population, and weakening of legitimacy that would follow an even bigger economic panic.
Mexico has been one of the top oil exporting countries of the world, and there is a great pride found in the 1938 law removing any and all foreign investors (because of this, March 18 is a civic holiday). But now as Pemex, Mexico's top oil company, has found itself slowing production by immense amounts, people are starting to worry about the future of Mexico's oil industry. Canterell, Mexico's largest oil field, has dropped production by about 50% in the past years, and many people are afraid that Mexico, who takes in 30 to 40 percent of their national revenue from oil, will be forced to start importing oil in the next decade.
Many researchers believe that the oil is there, beneath the land and deep in the Gulf of Mexico, but Premex just doesn't have the technological necessities or the money to reach it. Extracting oil from deep beneath the ocean is costly and risky, most companies find partners to share the financial risk with. The problem is that the Mexican constitution does not allow foreign investors to take any profit from oil they help find so no foreign partners are given any incentive to help. One water rig from deep in the ocean can cost $365 million a year to operate, and without outside help, Mexico's oil industry is going to suffer even greater catastrophe.
President Calderon has made some reforms to help Pemex and the oil industry, but the nationalistic view that the people have of Mexico's 1938 law, and the wish to keep foreign business out has stalled much of Mexico's needed technological advancement. Pemex has long been "a symbol of nationalism and sovereignty", but with this lag in oil production, it might cause Mexico to go into an even worse economic recession.
This article is important to look at in Comparative Government because it refers to Mexico's national belief in the Dependency theory, that foreign business and investors need to be kept out so that local and state businesses can develop. This also poses as a huge economic problem for Mexico. If one of it's main sources of revenue goes under, than the following economic crash will cause major civic unrest and political upheaval. it will be important to see how this plays out, and how the government deals with the problems of the drug war, growing poor population, and weakening of legitimacy that would follow an even bigger economic panic.
Posts
No comments:
Post a Comment