The Mexican oil economy, he says, may be on the verge of collapse. A much bally-hooed oil field discovery turns out not to be an oil field. The country's biggest oil producer, Cantarell, "is now in decline, perhaps radical decline."
The biggest bad news gusher: the state-run oil company is bleeding financially. According to The Oil Drum post: "To make a long story short, today PEMEX is actually losing money and heavily in debt despite oil prices hovering near $75/barrel. "
The post quotes the Dallas Morning News:
Yet the Mexican government has taken so much of Pemex's revenue (61 percent) and saddled it with so much debt (more than $75 billion, including pension obligations) that the company has had a negative net worth since 2002.
In May, the company reported net income of $700 million in the first quarter but a loss of $6.75 billion for 2005.
If the anticipated decline in Mexico's oil production should occur in the next few years, it appears that the consequences could be
- A possible collapse of the Mexican economy, which is already shaky. If some of you think we have an illegal immigration problem now, think again. It's not hard to imagine many more refugees from Mexico attempting to enter the United States.
- The problem in the US would be two-fold. The refugee problem just mentioned and the fact that we've lost a large percentage of our oil imports in a world where there is no spare capacity. This could precipitate a crisis which, as far as I know, no one has anticipated or is prepared to deal with.
Scary stuff. As of early 2005, the United States imported well over 1.5 million barrels of oil per day from Mexico.
It won't be easily replaced, no matter how much the George Bushes and Mark Green let Big Oil have its way. We need to think differently.