Watershed Moment for Mexican Energy and Society

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On August 11, 2014 Mexican President Enrique Peña Nieto signed into law new rules governing the historic reordering of Mexico’s state-owned oil, gas and electricity sectors, opening them to levels of participation by foreign and private companies not seen since the 1930s.  In 1938 President Lázaro Cárdenas nationalized the Mexican oil industry, taking over from British and U.S. companies that had developed it and long controlled production.  The move quickly came to be recognized as one of the most important moments in Mexico’s development as a nation state, and it’s economic and symbolic significance is hard to overstate. 

Since taking office in 2012, President Peña Nieto has moved quickly to put together a coalition between his party, the PRI, and especially the center right PAN,  to push a series of reforms through congress, but the energy reform is the most high profile and contentious.  The state-owned oil company PEMEX (Petróleos Mexicanos) retains the right to reserve some oil fields for itself, but both the government and its critics acknowledge that the new reforms are intended to completely reorder Mexico’s energy paradigm. 

Peña Nieto and company insist that the reforms will modernize it and bring it in line with 21^st century realities.  Their case is backed up by the decline in oil and gas production in recent years.  PEMEX has failed to open up significant deep-water or shale-gas production, and the government says private companies will bring in expertise and billions of dollars in investment.  They also claim that average Mexicans will benefit from lower power prices and more jobs.  Yet the reform has been fought every inch of the way by the left wing PRD party, and many Mexicans are still leery of how it will affect the nation.