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Energy and Sustainable Development in Mexico.

Article Excerpt
Energy and Sustainable Development in Mexico, by JOHN R. MORONEY AND FLORY DIECK-ASSAD. (College Station: Texas A&M Press. 2005). 154 pages, cloth, price $48.50; ISBN 1-58544-462-6

This is a book without a happy ending, but then the ending is not yet finished and it could go either way. After some 132 pages of facts, figures, analysis, and discussion, what the reader most wants to know, but the authors cannot say, is whether there exists a viable path by which the enormous wealth embodied in Mexico's trove of oil and gas resources can be transformed into an engine for constructive social and economic change. If so, then the espoused goal of "sustainable development" might be attainable. If not, the future looks much gloomier for Mexico and not so different than its past. Although the authors do not provide an answer to this ultimate question, they do manage to shine some light on important political and economic forces that constrain the petroleum industry in Mexico, and they provide a fresh demonstration of the scope and size of organizational and financial difficulties that beset the managers of Pemex, the Mexican national oil company.

Pemex is at the center of everything in this book, it constitutes a struggling corporate protagonist, one that provides a proper and compelling subject for study. By its own account, Pemex is the 9th largest integrated oil company in the world, the 3rd largest oil producer, Mexico's largest company, and a key supplier of crude oil to the US market. But, its budgets and investment projects are subject to direct Congressional approval, and its revenues are heavily taxed (providing roughly 1/3 of the federal government's total tax revenue). The obvious but naive strategy of cutting back investment funds and raising taxes has, so far, proven irresistible to the government as a means for meeting short-run financial exigencies. The downside of this strategy is apparent when one examines the level of capital expenditure. Relative to its peers, Pemex invests only half as much per barrel of oil produced as the others--$2.45 per barrel of oil equivalent in the case of Pemex...