Proposed Energy Reforms in Mexico Could Reverse Oil Production Decline

Mexico, the world's 9th largest oil producer and first to nationalize its oil production, has seen steep production declines as the state-owned oil company lacks capital resources and expertise. Constitutional reforms would entice private investment.

3 minute read

August 20, 2013, 10:00 AM PDT

By Irvin Dawid


Clifford Krauss writes that the energy reform laws were proposed by President Enrique Peña Nieto on August 12 for the purpose of attracting investment by international oil companies for "exploration (of) deep-water oil fields in the Gulf of Mexico and large onshore oil and gas shale deposits."  The reforms are needed in a nation that now imports half its gasoline from the U.S. as oil production and exports, key to the economic health of the nation, have dropped precipitously in the last decade as we noted here in 2006.

Krauss' colleague, Elisabeth Malkin, wrote a day earlier that the plan, "which would rewrite two constitutional amendments, challenges a bedrock assumption of Mexico’s national identity — its total sovereignty over its energy resources.."

The lack of reinvestment has had dire consequence. She notes that "production has dropped 25 percent from the peak in 2004, to just over 2.5 million barrels of oil a day. In addition, she add that "(d)emand for energy in the country is growing so fast that Mexico could turn from an energy exporter to an energy importer by 2020."

With foreign investment and expertise, "energy experts say the country could increase its production to nearly four million barrels a day by 2024 — potentially vaulting Mexico to the fifth or sixth position among the most prolific oil producing countries", Krauss writes. However, the reforms would have to be strong enough to ensure that "the profit-sharing contracts would be lucrative before (oil companies) invested in Mexico since the country would not formally give the companies a share of the oil reserves." 

And that might be a hard sell for the Mexican Congress to support. According to Malkin, "Public opinion is also suspicious about opening up the industry. A survey last year by CIDE, a Mexico City university, found that 65 percent of the public opposed private investment in Pemex, the state-owned oil monopoly.".

Mexico’s left-wing parties have been adamant that the Constitution’s 75-year-old prohibition on private investment should remain ironclad. From the right, the National Action Party, or PAN, proposed energy reform last month that would go even further than Mr. Peña Nieto to invite in private investment.

Neither article delved into the increased use of domestic energy. As we noted here in March about the largest Latin American oil producer, Venezuela, the desire to keep "motorists' happy by having the world's cheapest gas at 18-cents per gallon" resulted in decreased production, exports and increased debt.  

According to Bloomberg News, Mexico has "been gradually cutting the subsidy it provides at the gas pump as a way to keep expenses in check and as an environmental measure to remove incentives for wasting gas." In February, the average price of gas was $3.22 per gallon, seven-cents less than in the U.S.

Wednesday, August 14, 2013 in The New York Times - Global Business

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Cover CM Credits, Earn Certificates, Push Your Career Forward

Aerial view of town of Wailuku in Maui, Hawaii with mountains in background against cloudy sunset sky.

Maui's Vacation Rental Debate Turns Ugly

Verbal attacks, misinformation campaigns and fistfights plague a high-stakes debate to convert thousands of vacation rentals into long-term housing.

July 1, 2025 - Honolulu Civil Beat

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

July 9, 2025 - Diana Ionescu

Map of Haussmann's redesign of Paris in the 1850s through 1870s under Napoleon III.

In Urban Planning, AI Prompting Could be the New Design Thinking

Creativity has long been key to great urban design. What if we see AI as our new creative partner?

June 30, 2025 - Tom Sanchez

Red and white "Wildfire Evacuation Route" sign on signpost.

Cal Fire Chatbot Fails to Answer Basic Questions

An AI chatbot designed to provide information about wildfires can’t answer questions about evacuation orders, among other problems.

7 hours ago - The Markup

Protester at Echo Park Lake, Los Angeles holding sign that says "Housing is a human right"

What Happens if Trump Kills Section 8?

The Trump admin aims to slash federal rental aid by nearly half and shift distribution to states. Experts warn this could spike homelessness and destabilize communities nationwide.

July 10 - Shelterforce Magazine

Aerial of rainbow painted crosswalks at large intersection in Castro District, Sna Francisco, California.

Sean Duffy Targets Rainbow Crosswalks in Road Safety Efforts

Despite evidence that colorful crosswalks actually improve intersection safety — and the lack of almost any crosswalks at all on the nation’s most dangerous arterial roads — U.S. Transportation Secretary Duffy is calling on states to remove them.

July 10 - Streetsblog USA

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.

Home and Land Services Coordinator

Appalachian Highlands Housing Partners

Associate/Senior Planner

Gallatin County Department of Planning & Community Development

Senior Planner

Heyer Gruel & Associates PA