Mexico moves toward free-market oil

Mexico moves toward free-market oil

Mexico energy reformAfter its 1994 peso crisis, Mexico could have chosen more socialism — or move toward capitalism. It chose the latter and has been one of the world’s growth success stories ever since. Tax rates actually are lower than in El Norte (although property rights still are not as secure — for now).

Now it’s taking the biggest step of all: Allowing foreign companies back in to drill for oil.

It was 76 years ago that Mexico’s government nationalized all oil production. It was a time when socialism was on the march globally: fascism in Italy; National Socialism in Germany; communism in the Soviet Union. The Mexicans especially didn’t like the meddling Yanqui, who had invaded their country as recently as 1914-17 — 21 years earlier.

But times change. Today, seemingly everyone with a backyard in North America is finding black gold. Neighboring Texas has doubled oil production in a decade. North Dakota can’t control the growth it’s enjoying from the fracking boom.

Wildcatters

The boom is largely being carried out by wildcatters, as told in “The Frackers: The Outrageous Inside Story of the New Billionaire Wildcatters.” It’s the profit motive. When government tries to find oil, it’s like putting the DMV in charge. Mexico is figuring that out.

According to Fortune:

In a move that has both shocked and thrilled the global oil industry, Mexico’s government is performing an about-face.

For the first time in three-quarters of a century, it intends to invite international oil firms into the country to sink their drills into its petroleum-rich earth. That decision has infuriated many Mexicans, and it fundamentally threatens Pemex, which has always been a monopoly. As the oil giants prepare to pounce, ]Pemex CEO Emilio Lozoya], a Harvard-educated investment executive and an oil industry newcomer, has the task of whipping the bloated behemoth into competitive shape.

“It is, by all means, the most important transformation Pemex has suffered in our entire 76 years,” says the fresh-faced CEO, who speaks excellent English and chooses his words—including his verbs—deliberately. As he talks, he jots talking points onto a small white notepad that has been placed in front of his high-backed chair. By his right hand sits a red phone, a direct line to the office of Mexican President Enrique Peña Nieto, the oil reform’s architect and Lozoya’s friend and boss. 

Jobs

It means plentiful new jobs and strong continuing prosperity for Mexico. That means the recent trend of net zero immigration to the United States from Mexico will continue. Indeed, I suspect many Mexicans will go back to enjoy the prosperity and the much lower cost of living. Why put up with median-price $750,000 homes in Southern California and $1 million in Silicon Valley? You can’t even smoke in bars in Puritan California anymore, something the more libertarian Mexicans still can enjoy.

An Anglo friend of mine moved to Baja last year and loves it. Same weather as Yanqui California, but you still can get a safe place on the beach. Everything else is cheaper, including the tequila. And you legally can get Cuban stogies.

Sure, you have to find places that don’t have violence. But it’s the same here. You avoid Detroit.

Time to Go South?

5 comments

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  1. SkippingDog
    SkippingDog 27 August, 2014, 19:39

    The state of Baja California Sur has a homicide rate of over 11 per 100k, higher than any state in the U.S. The closest is Louisiana, with a homicide rate of slightly over 10 per 100k, largely because New Orleans has a city homicide rate second only to Detroit itself.

    Don’t you think it’s interesting that the most “conservative” and Red states in our union are the same states with the highest rates of violent crime?

    Reply this comment
    • Codey
      Codey 10 November, 2014, 15:37

      Yea but it’s the democratic blue areas where all the crime and murders are fact

      Reply this comment
  2. John Seiler
    John Seiler Author 28 August, 2014, 15:52

    Skippingdog: Actually, it’s a mix of Red and Blue states on both ends, and in between. Here’s the 2012 list from the FBI, least murders per 100,000 people, to most.

    The worst is Washington, D.C.,at 13.9. It voted 91% Blue (Obama), 7% Red (Romney).

    And if you went by county instead of state, it would be overwhelmingly Blue counties where murders occur.

    New Hampshire 1.1
    Vermont 1.3
    Iowa 1.5
    Idaho 1.8
    Massachusetts 1.8
    Minnesota 1.8
    Utah 1.8
    Maine 1.9
    Hawaii 2.1
    Oregon 2.4
    Wyoming 2.4
    Montana 2.7
    Kansas 2.9
    Nebraska 2.9
    South Dakota 3
    Washington 3
    Wisconsin 3
    Colorado 3.1
    Rhode Island 3.2
    New York 3.5
    Virginia 3.8
    West Virginia 3.9
    North Dakota 4
    Alaska 4.1
    Connecticut 4.1
    Ohio 4.3
    New Jersey 4.4
    Texas 4.4
    Kentucky 4.5
    Nevada 4.5
    Indiana 4.7
    North Carolina 4.9
    California 5
    Florida 5.2
    Pennsylvania 5.4
    Arizona 5.5
    New Mexico 5.6
    Oklahoma 5.7
    Illinois 5.8
    Arkansas 5.9
    Georgia 5.9
    Tennessee 6
    Delaware 6.2
    Maryland 6.3
    Missouri 6.5
    South Carolina 6.9
    Michigan 7
    Alabama 7.1
    Mississippi 7.4
    Louisiana 10.8
    D.C. 13.9

    Reply this comment
  3. Donkey
    Donkey 28 August, 2014, 21:10

    New Hampshire, with the motto: “Live Free or Die,” is the least violent!! 🙂

    Reply this comment
  4. Ted Steele, Editor
    Ted Steele, Editor 3 September, 2014, 06:52

    End big oil subsidies—- there is NO oil free market in the US!

    Reply this comment

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