Mexico's Oiling Days Are Numbered

Mexico's Oiling Days Are Numbered
Friday May 16, 7:08 pm ET
Ibd


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.


If we Americans think persuading our Congress to get serious about drilling for oil is tough, consider what the president of Mexico is going through.

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.

- rest at http://biz.yahoo.com/ibd/080516/issues01.html