CONTRIBUTING OP-ED WRITER Mexicos Theology of Oil By ENRIQUE KRAUZE Published: October 31, 2013 FACEBOOK TWITTER GOOGLE+ SAVE E-MAIL SHARE PRINT SINGLE PAGE REPRINTS MEXICO CITY — In almost every country, the availability and exploitation of oil are essentially economic issues — every country, that is, except Mexico, where it is a matter of secular theology. For many Mexicans, the question of whether to open the national oil industry to private investment is much more than a practical decision: It is an existential dilemma, as if permitting foreign investment were to bargain away the country’s soul. Enlarge This Image Pete Gamlen Go to Author Page: Enrique Krauze » Related in News In Move for Economy, Mexican President Seeks Foreign Investment in Energy (August 13, 2013) Times Topic: Enrique Peña Nieto Related in Opinion Editorial: Foreign Investment in Mexican Oil (August 18, 2013) Connect With Us on Twitter For Op-Ed, follow @nytopinion and to hear from the editorial page editor, Andrew Rosenthal, follow @andyrNYT. Enlarge This Image Miguel Dimayuga Enrique Krauze Over the next few weeks, the Mexican Congress is likely to become a kind of theological council to discuss the so-called Energy Reform proposal put forward by President Enrique Peña Nieto. The measure would modify Articles 27 and 28 of the Constitution and allow contracts between the Mexican government and private companies to share profits from the extraction of oil and gas throughout the country as well as deep-water sites in the Gulf of Mexico. It would also open the door to free competition along the whole chain of the industry: refining, transport, storage, distribution and basic petrochemicals. The historical significance of this proposal cannot be understated. In 1938, the Mexican oil industry was nationalized, and in 1960, a constitutional change assigned full control of the industry to Pemex, a state monopoly. The Energy Reform will require a two-thirds majority that can be achieved through the representatives of the PRI (the party that ruled Mexico from 1929 to 2000 and was voted back into power in 2012), the PAN (a center-right party, which would prefer even greater liberalization of the industry) and a few small parties. Representatives of the PRD (a party of the moderate left) will likely vote against the reform. The main opposition will not emerge from the chambers of Congress, but rather from the streets, where protests promise to become massive and angry. The opposition has a charismatic leader: Andrés Manuel López Obrador. Defeated in the last two presidential elections, he is positioning himself for a third run, in 2018. There can be no stronger platform than adamant resistance to a reform that he and millions of his followers regard as “a betrayal of the nation.” In a recent speech, he compared the possible passage of the Energy Reform to the loss of Texas in 1836 and Peña Nieto to Santa Anna, the general who lost the Mexican War and is remembered in history books as a “traitor.” But the economic arguments for such a rejection are weak. The opposition says that Pemex can, by itself, successfully explore the Gulf of Mexico and exploit shale deposits if the government grants it the financial autonomy to increase its investment. But the government commitment to oil exploration has risen sixfold in the last 10 years (to $25 billion, from $4 billion), without major results. The United States may be on the path to energy self-sufficiency, thanks to oil wells drilled each year in the Gulf (about 150) and about 10,000 new wells a year for shale oil and gas. Pemex drills only about five oil wells per year in deep water and plans only 140 wells per year for shale gas. And Mexico has to import large quantities of gas and gasoline. How, then, can the fierce opposition to contracts with private companies — which would halt the decline in production, modernize the industry, create jobs, substantially increase oil profits for the Mexican state and foster much needed economic growth — be explained? Why can’t Mexico, like Brazil or Norway, develop its publicly owned oil company into an enterprise that can successfully benefit from association or competition with private companies? The first reason is the controversial record of privatization in Mexico. When Carlos Salinas de Gortari, president from 1988 to 1994, transferred ownership of banks, television and telephone companies from the state to private hands, the general view was that he had favored his friends, with lucrative results for the new owners but not for the consumer. Yet the Energy Reform is not an act of privatization. Contrary to the opposition’s rhetoric, no property will be transferred to the companies involved. 1 2 NEXT PAGE »
Posted on: Sat, 02 Nov 2013 02:27:43 +0000
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