Posted on 05/25/2008 3:40:41 PM PDT by Diana in Wisconsin
As if the constant flow of illegal aliens and drugs from Mexico were not already a huge problem for the United States, it is about to get worse. When Business Week took notice of Mexico's dwindling oil reserves and failed national oil company, Pemex, in its May 5th edition, it signaled a problem whose significance is as great as the one involving an invading population.
"A Slippery Moment for Mexican Oil" was the title, followed by "Output is tanking, but there's fierce opposition to a plan that could reward Big Oil for helping find new reserves." You have to read through most of the article before you discover that, "Oil output in Mexico, the world's No. 6 producer of crude, is plummeting. At the Cantarell field, the country's main source of oil, production is declining 15% annually…Unless new reserves are found quickly, Mexico-which accounts for 11% of U.S. oil imports-could stop export ing within a decade."
It takes at least a decade between the discovery of new reserves and the infrastructure required to extract it, transport it to a refinery, and then distribute it to consumers.
The May issue of Energy Tribune applauded the efforts of Mexico President Felipe Calderon to free up Pemex sufficiently to encourage exploration and production. "Under the reform, Pemex would be freed from stifling oversight," but noted that, "Its approval is far from certain, and the proposal wouldn't turn Pemex's fortunes around any time soon."
Allan Wall, a U.S. citizen who lives in Mexico, writes some of the most penetrating and accurate commentaries about our neighbor to the south. In May, his Memo from Mexico, provided notice of how bad the problem is and, while not saying so, also reminds us that America with its own vast known and undiscovered reserves of oil, has been wasting time and thwarting access to our oil resources.
Wall begins by reminding us that Mexico is not "poor." Its citizens are not starving and it's home to at least ten billionaires, one of whom is the world's second wealthiest man. It's not that Mexico doesn't have "vast economic potential," but that, "It's just been spectacularly mismanaged."
"Mexico has one of the world's most closed petroleum markets, controlled by the state oil company, Pemex (Petroleos Mexicanos), which is protected from all competition." It enjoys a legal monopoly on the exploration, processing, and sale of petroleum."
Pemex has long been the government's piggy bank, providing up to 40% of the nation's revenues. If any nation could be said to be "addicted" to oil, it's Mexico. You would think that it would have taken steps to explore for more, but you would be wrong. You would be wrong if you thought it had bothered to build new refineries as well. The United States has 150 oil refineries (and needs more), but Mexico only has six and they are aging.
Pemex has been spectacularly mismanaged. In this respect it is not much different from the rest of the world's nationalized oil operations that include unstable governments like those in Africa and South American operations like Venezuela's communist dictator. What this means is that the United States and other oil importing nations are literally at the mercy of governments that do not have to answer to their citizens.
The United States has depended heavily on imports from Canada and Mexico, but the latter nation is a governmental basket case. With ownership of its oil written into its constitution, the prospect of privatizing its oil industry is off the table. Permitting other oil companies to explore for oil is difficult at best under these circumstances. It is a costly and high-risk enterprise at best. Any new discovery would cost in excess of a billion dollars. And you don't hit oil every time you drill.
If oil were not enough of a problem, the billions in drugs that are controlled by the Mexican cartels and purchased by Americans constitute an entire column by itself. We have a narco-army on our border that poses a major threat.
Meanwhile, Mexico has been "solving" the problem of a lack of jobs and opportunities for its people by exporting them to America. The U.S. taxpayers are picking up the bill for these uninvited workers through our education, health, and legal systems to the tune of billions. Congress has been reluctant to close our border with Mexico and the three candidates seeking to be our next president have no plans to slow or stop the invasion.
These are solvable problems if sensible people make sensible changes and encourage investment in their energy sector, but neither the United States, nor Mexico, appears ready to do that. Instead, out of sight of U.S. citizens and Congress, the two governments, in concert with Canada, are re-writing U.S. trade regulations to create a so-called Security and Prosperity Partner ship of North America, undermining the sovereignty of all three nations.
Earlier this month, a lot of people in America celebrated Cinco de Mayo, but a lot of them were not legal citizens.
(Alan Caruba writes a weekly column posted on the website of The National Anxiety Center, www.anxietycenter.com. He blogs at http://factsnotfantasy.blogspot.com.)
© Alan Caruba, May 2008
Thanks, Alan. (I think!)
+ Mexico nationalized its oil industry in 1938 and created state-run monopoly Pemex. Mexico has some of the tightest restrictions on private investment in energy in the world, with stricter rules than Cuba, China and Russia.
+ Mexico’s oil reserves are declining due to years of low investment under seven decades of one-party rule until 2000. Today, Pemex discovers only one new barrel of oil for every two it extracts.
+ A refining shortfall means Mexico imports 40 percent of its gasoline. It also imports some natural gas.
+ Taxes on oil exports fund nearly 40 percent of government spending, but having to hand over more than half its total revenues has held back Pemex’s spending on exploration and new refineries. Two recent tax cuts slightly eased Pemex’s burden.
+ Mexico produces about 3 million barrels of crude per day, down from a peak of 3.4 million bpd in 2004, and exports about 1.5 million bpd, making it the world’s No. 9 oil exporter.
(Reporting by Jason Lange and Catherine Bremer; editing by Carol Bishopric)
I’m not scared. I know congresscritters like Maxine Waters will have the answers to solve these big problems.
Socialism doesn’t work.
The ten years from discovery to delivery everyone seems to be stuck on is not true in all cases. Especially in an offshore operation. As for ANWR, they already know where to drill and the Prudhoe Bay field, that is the start point for the Trans Alaskan Pipe Line, is not that far away. I bet they could do it in far less than 10 years, three or four, especially if it became a priority!
It's run by socialists. Of course it was mis-managed. PJ O'Rourke once said something about the Soviet Union's economy being like a top fuel dragster doing burn outs on your lawn - expending lots of effort, but going absolutely nowhere.
the United States and other oil importing nations are literally at the mercy of governments that do not have to answer to their citizens.
The United States government doesn't answer to its citizens any more, either.
Yes, perfectly true. And when the money from oil revenues really starts to decline, the Mexican government will predictably start taxing and confiscating other foreign investments, because they certainly aren’t going to make those billionaires or drug lords pay any taxes. The economy will spiral into a worse decline, no doubt leading to unrest and revolution. Ugh.
Another salient point is that the US hasn’t been much better than Mexico in developing its oil resources and refineries in the past 16 or 20 years. Our government seems determined to head down the same failed path as Mexico.
A politician or bureaucrat cannot be relied upon to make good investment decisions, because his horizon does not extend past the end of his term of office.
Man, she’s an idiot, isn’t she? I literally CRINGED listening to her stupidity the other day when she was grilling oil execs. I give them full credit; I would’ve full-out laughed in her ignorant face!
Hey, I know- let’s send Mexico 1.4 Billion dollars to fight their drug war. That’ll fix all their problems. /s/
While on FR listening to John Batchelor talk show who is great on politics and world affairs on WABC NYC
Anyways, I live in San Diego and around 15 miles north of the border with Mexico - Tijuana.
The killings, kidnappings, beheadings, etc is out of control
Army troops in the streets south of me, up to 14 a day killed.
The corruption, drug cartels, etc. has been out of control for decades. In the mean time San Diego tax payers shell out mega millions a year supporting illegals. WE are more than fed up.
Theres a braintrust!
When Maxine discovered toilet paper for the first time, she screamed because she thought she was melting!
Hell, if I’d have know’d that Alaska wuz so close to South Carolinny, I’d have visited there a long time ago!
It makes so much sense sending $1.4 billion to Mexico from our deficit filled budget. I don’t know how the thieving scumbags in Washington can justify this on top of the billions already spent on illegals every year? We should just send our taxes directly to Mexico since they suck up so much of them.
“sending $1.4 billion to Mexico from our deficit filled budget”
California spends that a year funding illegals in Medical, and general social welfare and we are supposed to take it and like it.
This is why the Duncan Hunter double fence needed to be continued long ago rather than others putting on the brakes on it.
Our congresscritters are going to allow this illegal invasion to go full stroke in another year from now, no matter who wins the White House. It’s all about wielding social services power over a massive voting demographic, reminiscent of FDR and LBJ’s socialism. We think we have it bad now? Wait until we have a couple of million illegals a year storming across the border in to escape their repressive regime and the drug gangs. Mexico is a 3rd world s*&thole and it’s about to turn the US into one as well.
US management of its oil resources is no better than Mexico’s. For us the “corruption” is environmentalism and MIMBYism. The effect is the same as with Mexico’s more traditional forms.
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