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On May 5, 9:24 pm, "BretLudwig" wrote:
Memo From Mexico, By Allan Wall
PEMEX Fritters Away Mexico’s Oil Wealth. Closing The Borders Would Help

"Mexican poverty is constantly used to browbeat Americans into accepting

mass immigration (legal and illegal) from Mexico.

After all, how could you refuse poor Mexicans from entering the United
States—they are from a very poor country, right? They’ll starve to
death otherwise, right?

Well, maybe Mexico is poor in comparison to the United States. But by
world standards it’s certainly not among the poorest. And its people
aren’t starving.

In fact, Mexico has some very rich individuals, including at least 10
billionaires, among them Carlos Slim, the world’s second-wealthiest
man.

And Mexico also has vast economic potential. It’s just been
spectacularly mismanaged.

A prime example: petroleum. If managed properly, Mexico’s oil could
produce great wealth for the country, and could serve as the basis of
myriad manufacturing industries.

Somehow, though, it just hasn’t worked out that way.

Mexico has one of the world’s most closed petroleum markets, controlled
by the state oil company PEMEX (Petróleos Mexicanos), which is protected
from all competition. PEMEX enjoys a legal monopoly on the exploration,
processing and sale of petroleum

The peculiar privileged status of PEMEX in Mexico affords it immunity from
criticism. Mexicans are taught that PEMEX represents Mexican sovereignty
and the property of the nation, even Mexican identity itself. Every March
18th, the Petroleum Expropriation of 1938, when the oil was nationalized
and foreign oil companies were kicked out, is celebrated in the schools.

Thus to talk about privatization, or even private investment in PEMEX,
invites hysterical denunciations for “selling out" the fatherland. PEMEX
is linked in the minds of some Mexicans with their reflexive
anti-Americanism and the paranoid fear that Americans are going to steal
Mexico’s oil.

In 2003, as reported in a previous VDARE.COM article, Republicans in the
House International Relations Committee voted to link any "migratory
accord" with Mexico with the opening of PEMEX to American investment. The
proposal stated that Mexican petroleum reform could "fuel future economic
growth, which can help curb illegal migration to the United States." [My
emphasis]

Reaction in Mexico was swift and harsh. President Fox rejected the
proposal, affirming that PEMEX is "part of our history". Foreign minister
Derbez even claimed that migration is a bilateral issue—but oil is a
domestic Mexican issue! (Oh, you thought U.S. immigration policy was a
domestic American issue? Mexicans don’t agree).

So how is PEMEX doing now, 70 years after the Great Petroleum
Expropriation?

Oil prices are up, which ought to be good for the company. In fact, on
April 28th, the price for Mexican crude reached a record high.

Nevertheless, PEMEX finds itself in dire straits. Its biggest petroleum
source, the Cantarell Field in the Gulf of Mexico, has peaked and is in
decline.

There’s probably lots more oil out there in the Gulf. But PEMEX lacks
the expertise, the financing, and the equipment to find it. Only about 20%
of Mexican territory has been properly surveyed to find oil.

Here’s one analysis of PEMEX’ inability to drill in deep waters

"PEMEX doesn’t currently have the technical, organizational,
administrative capacity, nor the highly qualified personnel, to begin
exploratory drilling in ultra-deep waters…..Its deficiencies would be
even greater to the extent that drilling activities were successful, given
that the development of fields requires even greater human and technical
resources." [Ultraprofundas, by Sergio Sarmiento, El Siglo de Torreon,
March 24th, 2008, my translation. ]

So who said that? Some capitalistic Big Oil magnate trying to steal
Mexican oil?

No, that’s a quote from Adrian Lajous, former director general of PEMEX.
He ought to know.

Other problems include the company’s massive debt, its thousands of
miles of pipeline constantly being tapped by oil thieves, and its history
of environmental disasters and dangers to the public.

PEMEX holds the dubious honor of having the largest accidental oil spill
in history, in 1979, when an exploratory well exploded in the Gulf of
Mexico. In 1984, explosions at a PEMEX storage facility in Mexico City
killed 500 people. In 1992, explosions in Guadalajara killed over 200
people.

PEMEX service stations, with their familiar green signs, dispense gasoline
nationwide to captive Mexican consumers. The stations are actually operated
by private contractors who obtain concessions to operate them.

But many PEMEX stations are notorious for dispensing petrol by utilizing
some special techniques. One example is what customers refer to as
chiquilitros (little liters). That means if you purchase 10 liters, you
might really be getting 9 pumped into your tank. Or the fuel may be
diluted with water, typically in a 3 to 1 gasoline to water ratio.

Water and gasoline do not mix.

Gravity will separate them. Putting water in gasoline storage tanks
will result only in the tanks pumping out pure gasoline until the
gasoline runs out, then pure water.

Unless you replumb them to pump from the bottom in which case the
reverse is true.