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From: Nancy Harkey, Ph.D. and Professor Emeritus [e-mail her]
Mexico's greatest single source of wealth is its access to rich fields of oil. But its greatest boondoggle is its mismanagement of this asset.
The Los Angeles Times business section has just published a lengthy report on Pemex, the state-owned petroleum Company that has been watching its shallowest, most easily accessed fields decline fairly rapidly, while doing nothing to locate the new, rich fields known to exist in the Gulf of Mexico.
At a high point in 2004, production was about 2 million barrels per day, but more recently has declined to about 1.46 million barrels: "a very serious loss." [Woes Mount For Mexico's State Oil Titan, By Maria Dickerson, Los Angeles Times, January 2, 2008]
More distant reasons involve the fact that the government takes an inordinate amount of revenue in taxes from Pemex. The Times reports that from sales just under $100 billion dollars for 2006, the government took $54 billion in taxes thereby profoundly weakening the goose that lays its golden egg.
One consultant firm comments that Pemex is thus much more than an oil company; it is a powerful symbol of Mexican national sovereignty. As a result, privatization is considered to be politically impossible.
According to the Times, Pemex is $52.3 billion in debt and is therefore the most-indebted oil company on the planet. This makes bailout from outside capital loans out of the question.
The core financial resource of Mexico is in deep trouble. Its assets are necessary for the continued development of roads, schools etc. but its income is dropping drastically.
Instead, the U.S. continues to supply jobs, education, housing and medical care to millions and millions of Mexican immigrants. So the need for Mexico to act responsibly on behalf of its citizens is correspondingly reduced.
And so it goes…the more we do for Mexico, the less it does for itself.
Harkey's mother emigrated from Scotland and her father from Norway. Her specialty at California State University at Pomona was biological psychology. Harkey describes herself as "a political conservative on most issues with first hand experience in how painful that can be in the academic setting."