Posted on 05/16/2008 6:41:32 PM PDT by Kaslin
Energy: Even without a terror attack on its oil facilities, Mexico's output is falling sharply and could end as soon as 10 years. Its president is setting an example by fighting a difficult Congress and culture to reverse that.
Put simply, Mexico's state oil company, Pemex, is running out of oil. Its output has plunged 20% in the last three years, an unsustainable drop that could lead to a collapse of the country's oil industry in a decade, according to Mexico's oil minister.
Exports could halt in as little as five years. This would be a fiscal disaster, given Mexico's reliance on oil earnings for 40% of its budget.
Nationalized since 1938, Pemex has muddled through for years on the nation's easily recoverable oil. But that's now running out. And without massive new investment to boost output, Mexico's oil experts warn, Mexican citizens will have to pay much-higher taxes or shut down nearly half of the federal government.
That's why President Felipe Calderon is taking the lead on a farsighted third option: using his political capital to reform the nation's oil sector and boost output — as America should be doing.
Mexico has other offshore fields that can replace its giant Cantarell field, but they're too far out and too deep in the Gulf of Mexico for Pemex to extract. It makes sense to invite in foreign partners from the private sector who can provide the technology. But under the 1938 oil nationalization, foreign investment isn't allowed.
(Excerpt) Read more at ibdeditorials.com ...
Oh man. The U.S. is already their outsourced unemployment insurance provider. What will they do, send another 20 million north?
Mexico is running out and we are doing nothing to develop other sources. Real smart country clubbers, real smart, This is why we will have your heads handed to us on a platter this November. Granted the Dem’s aren”t doing anything either, but you are the ones in power.
Awww, poor Mexican government. Too bad, so sad.
how did they lose so many billions of barrels of proven reserves?
what happened to that huge find in the gulf that Mexico was going to do the drilling for?
If you consider the power of the MSM, the Republicans have not really been in power since 1932.
Just charge us. We’re already paying health, education, and employment for a good percentage of their population. May as well do the rest.
Similar with the Ruskis.
That’s what I’m thinking. But they have this law, you see, and they expect outsiders to respect THEIR laws... and until they change it, no outside investment.
You have to read the editorial. It seems he has the same problem as the House has with Pelosi
To be sure. But I can TEMPORARILY bask in the reflected glow of their incompetence and stupidity, can’t I?
You are getting of the subject which is oil
Pemex doesn't have the technology, the resources or the expertise to exploit it.
And foreign investment in Mexican petroleum production is forbidden by law.
You could view it as a lesson in where protectionism leads...
State-run oil companies have ALWAYS been fiascoes, going back at least to the 1910s, unless the crude is so shallow that even a moron like Gork would know how to lift it.
We can always burn caribou in our fireplaces! (sarcasm)
Most government oil companies are hopeless. They make up for it by bidding out concessions to foreign investors, which is to say, foreign oil companies by and large.
The foreign investor pays a huge sum up front for the right to invest a huge sum of money exploring, drilling, developing. They pay a generous split of whatever they make to the host government, get taxed on their half, and at the end of the agreed time period they hand the whole thing over to the host government. The government, then, either operates it themselves or put it back up for bid.
Its a win-win-win for the host government, who gets to make money on the concession without putting anything in themselves, and they are insulated from the corruption in their own government oil company.
The terms of the divorce are written in up front, so the investor can calculate all of that in from the beginning. Even so, some countries will try to change the rules after hundreds of millions have been invested, and if you don’t like it, what are you going to do about it? The oil business isn’t for the faint of heart.
Mexico has the worst of all worlds. They mostly don’t allow foreign investment in their oil industry. So they are completely exposed to the full effects of government inefficiency, waste, politicized planning, corruption, without outside investors to ameliorate the situation. Without private investment, most government oil operations go down, down, down year after year.
Thank you
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