World Savvy Monitor

Mexico and Canada are the largest suppliers of oil to the US.  Energy exports and imports among the three countries are not covered by NAFTA, and there is no broad energy policy regarding pricing or supply on the continent.  Mexico’s energy sector is highly intertwined with its foreign policy – it is the world’s seventh largest oil producer, yet its lack of technology and infrastructure to refine its own crude oil make it dependent on foreign imports for gasoline and other petroleum products.  Mexico is not a member of OPEC.  

As with Saudi Arabia, US companies helped to develop the Mexican oil industry, and enjoyed a lucrative advantage in the Mexican energy sector until oil fields were nationalized by the Mexican government during WWII.  

In 1976, new reserves were discovered in the Gulf of Mexico, including the massive Cantarell oil field.  Mexico borrowed heavily from foreign investors to develop these reserves, contributing to its debt crisis in the 1980s and 1990s.  

• As the world’s largest oil consumer, the US has a significant interest in Mexico’s continued role as an energy exporter, especially since other oil producing states are located in unstable regions (Middle East and Africa) and/or are unfriendly toward the US (Venezuela and Iran).

• There is concern regarding the reliability of the oil supply, however, due to the declining output of the Cantarell fields and the vulnerability to oil installations in the Gulf of Mexico to hurricane damage.

The government of Mexico is highly dependent on the global energy market for its survival.  Oil comprises 15% of Mexico’s export earnings, but nearly 40% of all government revenues in the form of taxes and payments from state-owned oil monopoly Pemex.

Next:  Mexico in the Context of North America:  The Environment