Canada, as a fellow member of NAFTA, should welcome the prospect of an opening up of the Mexican economy, specifically in the oil industry, even if it may result in some competition with Canadian firms. The NAFTA group of countries should constitute a more dynamic economic area.
President Enrique Peña Nieto of Mexico is right to propose that privately owned firms should be allowed to enter into joint ventures with Petroleos Mexicanos, the state-owned oil company usually known as Pemex.
Pemex’s stringent monopoly, entrenched in the Mexican Constitution, has had an almost religious status. It was created in 1938 by a president of the party that Mr. Peña Nieto now leads, the Institutional Revolutionary Party (PRI).
The President’s plan is to leave the underlying oil-and-gas assets in the hands of the state corporation; the Mexican Congress would probably not pass a more thorough-going constitutional amendment. As things stand, even profit-sharing with Pemex is unconstitutional.
Over the decades, the Mexican government has relied too much for its revenues on Pemex; the corporation has not invested enough in capital assets, which in turn has led to lesser output – falling steeply after peaking in 2004 – and higher costs. Mexico is in danger of becoming a net oil importer – not the worst of fates in itself, but an anomaly for a country with such large energy resources. Already, nearly half its gasoline comes from abroad.
Mr. Peña Nieto’s proposal is a half-measure, or even a quarter-measure. It may be partly intended to get the Mexican public accustomed to such idea.
It remains to be seen whether non-Mexican oil companies can come to satisfactory terms with Pemex.
In any case, Mr. Peña Nieto is proving that his presidency is no mere reversion to the policies of the long dominance of the old PRI.
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