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Title: Mexico, one of the world's biggest oil producers, is running out
Source:
IHT-Bloomberg News
URL Source: http://www.iht.com/articles/2007/10/22/bloomberg/bxatm.php
Published: Oct 23, 2007
Author: Valerie Rota and Patrick Harrington
Post Date: 2007-10-23 13:47:22 by Horse
Keywords: None
Views: 125
Comments: 1
MEXICO CITY: President Felipe Calderón of Mexico is delivering a grim message: The largest oil producer in Latin America is running out of crude. "Our oil reserves have been consistently falling," and the decline is "severely threatening" government finances, Calderón told a nationwide television audience in an address last month at the National Palace. That is the same place where seven decades earlier Lázaro Cárdenas cemented the anti-U.S. legacy of his presidency by nationalizing the oil industry. Mexico was the sixth-biggest producer last year, after Saudi Arabia, Russia, United States, Iran and China, down from fifth in 2005, according to the Energy Information Administration. In 1921, Mexico was No. 2. Calderón said in his Sept. 2 address that the country held proven reserves that could last nine years. Venezuela, the second-biggest oil producer in Latin America, has reserves to keep pumping at current levels for more than a century. The ban on private investment in its oil monopoly is depriving Mexico of the benefits of record high prices and contributing to a slowdown in economic growth. Production of crude, the top export for Mexico, has fallen 8 percent since 2004 to a seven-year low, data compiled by the government show. Mexico is being punished for its inefficiency in the foreign exchange market. The peso fell 0.08 percent against the dollar this year, the worst performance among the 16 most-traded currencies. Goldman Sachs in New York and Credit Suisse in Zurich say that the decline will worsen. "If the oil output situation was different, if it was stronger, if oil output was rising, not falling, we most likely would be seeing a stronger peso," said Alonso Cervera at Credit Suisse in New York. The drop in production is hurting economic growth by reducing funds to improve highways, bridges and ports, Cervera said. Oil provides 40 percent of government revenue and the slowdown contributed to a 47 percent decline in the national budget surplus in August, according to the Finance Ministry. The Mexican economy has grown at an average annual pace of 2.8 percent since 2002, down from 4.4 percent during the previous five-year period. Output has dropped to a seven-year low of 3.12 million barrels a day as the state monopoly Petróleos Mexicanos fails to develop new reserves to offset dwindling production at Cantarell, the world's largest offshore field. Crude rose as high as $90.07 a barrel in New York last week. The 50 percent price increase from a year earlier pushed up the Canadian dollar 21 percent against its U.S. counterpart, while the Brazilian real gained 19 percent and the Norwegian krone strengthened 16 percent. Canada, Brazil and Norway all export oil. The $15.4 billion Petróleos Mexicanos investment plan this year covers only half what is needed to fully develop the country's oil and natural gas industry, said George Baker, who runs the energy research company Baker & Associates in Houston. Pemex, as Petróleos Mexicanos is known, also needs access to foreign companies' deep-water drilling technology to increase its reserves, said Baker, who has been analyzing Mexico for three decades. "Oil production in Mexico is declining and declining fast," said Alberto Ramos, a Latin America economist in New York with Goldman Sachs. "What is needed is a serious energy reform that would allow Pemex to partner with other companies." The peso will weaken 2.8 percent against the dollar by March, Ramos said. The slowing U.S. economy, which weighs on Mexican exports and migrant worker remittances, is also hurting the peso, he said. Calderón, who served as energy minister for eight months under his predecessor, Vicente Fox, has made no direct calls to end the 1938 ban on private oil ownership, said Sergio Méndez at Prudential Bank in Mexico City. Since taking office in December, the president has instead pointed out the shortcomings of the state-run industry, Méndez said.
Poster Comment: I posted this under immigration because this article means that millions more will want to immigrate to the USA. A few thoughts: 1) There are almost 108,000,000 Mexicans. More than 32,000,000 million of them are under 15 years of age. That means that they will make 32,000,000 babies over the next 15 years if they ever achieve Zero Population Growth. 2)Mexican polticians love Nationalized Oil. In the old days the Mexican ruling party, PRI, took 20% of the oil revnue and divided it up amongst the power elite. PArtnerships might increase production but I think this is just the case of a maturing oil field declining in production. When the dollar collapses, unemployment hits 25% and the Global Depression goes into gear, the demand oil will drop along with the price. If the price of oil dropped back to $20 a barrel while production also declined, Mexico would lose 80 to 90% of their oil revenue. This would be a financial disaster of major proportions for us and Mexico. 3) When the dollar crashes, unemployment in the U.S. will easily hit 25%. And wages in real after tax dollars will be cut in half. Massive unemployment and wage cuts, will severely restrict the flow of dollars into Mexican cities and rural areas. The oil money was concentrated in the hands of a few. Therefore even though oil revnue is for the time being greater than remittances to relatives back home the latter does benefit Mexico more than does the oil. When one source is cut 80 to 90% and the other is cut 50 to60%, Mexico will collapse. And ten million people could come here in one year. I have been advising people to leave all American cities and to sell all property in those cities. Your neighborhood might be exclusive but it is too close to the rest of humanity to survive. Do not move to any border state because you will be in the path of ten million Mexicans with only a few days supply of food and no prospect of a job or of landing welfare. If you go to a small town and see signs saying "Se habla espanol" that is English for keep driving onto another town. Do not live alone. Form a safety committee in your new neighborhood. When the dollar collapses, your government will also disappear. That has obvious advantages but it will also have disadvantages.
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#1. To: Horse (#0)
Good advice.
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