Maybe human history boils down to something pretty simple:
Humans are a selfish territorial species that goes to war with others of their species to control valuable resources.
We may remember our high school history on the fights that shaped the U.S. and Western Hemisphere. The Spanish search for gold and silver. The British and French fight for beaver pelts. Everyone's fight to control New Orleans and passage on the Mississippi.
And for the last 150 years, the fight for access to oil at a favorable price. That fight forced the hand of Japan, which led to their attack on Pearl Harbor. That fight was what made Stalingrad so important to the Germans and Soviets in World War II. I have written this week about our struggle to get Iran's oil. We got a recent lesson on Venezuelan oil -- ours now. We may get a lesson soon on how stopping Venezuelan oil exports to Cuba will allow the U.S. to "take," as President Trump puts it, Cuba.
Less known is our history with Mexican oil. College classmate and Mexican expat Erich Almasy reminds us. Will we go to war with Mexico again? I suspect not. Trump doesn't want Mexico, which is filled with the wrong sort of people, i.e., Mexicans, not as long as we can get what we really want and need, which is its oil, reliably and a price we like.
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| Erich Almasy and his wife Cynthia Blanton |
Guest Post by Erich Almasy
Today, the price of gasoline in México went up 15 centavos or about six American cents. This may not sound like a lot, but it is the first time in over two years that the price has changed. The Mexican government prefers to keep prices steady, absorbing higher oil prices and profiting when the world price falls. The present doubling of the international oil price apparently left them no choice. At just over 24 pesos per liter, we currently pay the equivalent of US$5.16 per gallon. While México has many “international” brands of gasoline (BP, Shell, Mobil, and Total), the government sets the wholesale price because the national oil company, Pemex, owns all six of the country’s refineries.
Early Mexican Indigenous peoples used tar that seeped from the ground to seal their canoes. Mexican oil has been a part of its political positioning since the first wells were drilled in 1869 by American wildcatters. Throughout the rest of the 19th century, Americans dominated exploration and production, with more than 400 companies holding oil rights. The Californian Edward Doheny and the Texan William F. Buckley, Sr., brought modern technology and production methods to México, along with their skill in subverting the political system to their benefit; first under President Porfirio Díaz and then under the military dictator Victoriano Huerta. During World War I, México tripled its oil exports to the United States, reaching 100 million barrels in 1920; 73 percent of production was from American interests and 21 percent by British ones. Foreigners were taking the vast majority of profits, and despite oil taxes that accounted for 20 percent of México’s GDP, an anti-American government led by President Álvaro Obregón passed legislation declaring that all subsoil resources belonged to the Mexican people.
More oil was discovered during the 1930s, eventually leading to the expropriation of lands in 1938 under President Lázaro Cárdenas del Rio. American oil interests had shifted their attention to developing the Venezuelan oil industry, and Mexican oil wells and working conditions had deteriorated. In retaliation, the foreign oil companies boycotted México, denying it the critical chemicals needed to refine. The American government ceased buying over US$30 million of silver annually from México, raised tariffs on Mexican oil, and threatened to seize Mexican oilfields in 1939. That’s when, in a masterstroke, Cárdenas offered to sell Mexican oil to Germany, which had just begun World War II. Faced with a possible Axis ally on its southern border, the United States permitted the expropriation to continue, more interested in a strategic alliance than a disgruntled neighbor. México declared war on Japan and Germany in 1942, and eventually, US$29 million was paid in compensation for the expropriation. Last week, on March 18, the anniversary of the expropriation was quietly celebrated at the Capitol in México City. It remains a key date in México’s sense of itself.
Today, México is the eleventh-largest oil producer in the world and the fourth-largest in the Western Hemisphere (after the United States, Canada, and Brazil). Current volume is about 1.7 million barrels per day, down by over 50 percent over the past 20 years. Proven oil reserves of over 6 billion barrels should imply a healthy industry, but most of them are offshore, requiring more expensive drilling technology. Even as production declined, oil taxes remained at over 20 percent of total government revenues. The presidency of Pemex has, to some extent, become a symbol of Mexican corruption. Since 2000, five major bribery, embezzlement, and money laundering scandals have plagued the company and its leaders. The funneling of Pemex operating funds to political parties became so widespread that the company came to be known as Hucha, or “piggy bank.”
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