What-if? Mexico Oil Strike

[Lord Poe]

What would happen if the hugest oil deposits in the world were discovered in Mexico, just outside Mexico City? I'm talking about an oil strike that would make the Arab world's oil resources pale in comparison?

Would Mexico prosper as a nation overnight? Would it tear itself apart? Would it have the world's biggest bargaining chip when dealing with the United States? Would the U.S. deal with Mexico rather than the Arab nations?

[CaptainChewbacca]

America would definitely deal with Mexico over the arabs. I don't know if Mexico would necessarily prosper, though, because its government is corrupt from top to bottom and the oil companies have been there for decades already. Mexico MIGHT get a bit more leverage over the US in the long run and have more revenue, but I think they'd mismanage it just as bad and use their new leverage to keep the US from toughening immigration laws.

[Jaepheth]

I, for one, welcome our new 51st state...

Texico.


I would think that an elite few would get rich, overall living quality may increase a bit, but not as much as you'd think.

[Darth Fanboy]

The question I ask in this scenario is would there be enough jobs to stem the tide of illegal immigrants? If we're talking about a strike so big it would rival or surpass OPEC, then its going to take a lot of labor.

[Morilore]

I've read it suggested that massive natural resource reserves are actually very bad for a country's social and economic justice, since those who control such resources can sell them to wealthy foreigners for a source of income that doesn't depend on their society's prosperity.

[weemadando]

America quickly devotes billions to horizontal drilling technology.

[J]

Depends on who finds the oil and how good the lawyers are. If one of the Big 4 companies (ExxonMobile, Chevron-Texaco, Shell, BP) finds it their army of lawyers, lobbyists, and bought off politicians will almost certainly secure a deal which is very favourable to the company's interests, meaning Mexico's pretty much out of luck, the money will be flowing right into the company coffers, and the Mexicans employed will be getting paid just enough to keep them loyal. The Big 4 operate as a Cartel as well so if one of them makes the find you can expect the others to be cut in to solidify their control of the resource and to make use of the additional connections. They did it to the Middle East and the rest of the world in the last century and they'll do it again. They will lock up the oil and watch the money flow, it will be a big step back towards the market dominance of Standard Oil and if you think ExxonMobile's quarterly profits are excessive, wait'll you see what they pull off.

Now if the Mexicans or one of the smaller independants makes the find, that's when things get interesting. The Big 4 will be waiting with their lawyers and power brokers to take over the action, and there's a fair chance they can pull it off. Which means the Mexicans better nationalize their oil and do it fast. If they succeed then things get really interesting. Chances are they'll end up more like Venezuela than anywhere else, but with a bit more power thanks to their proximity to the US.

[Azazal]

ahh minor point - http://countrystudies.us/mexico/78.htm

To my understanding Mexico has already nationalized their oil infratsrtucture, production, etc.. and has not denationalized it, though I could be horribly behind the times.

In 1938 President Lázaro Cárdenas nationalized the petroleum industry, giving the Mexican government a monopoly in the exploration, production, refining, and distribution of oil and natural gas, and in the manufacture and sale of basic petrochemicals. Although Cárdenas offered compensation, United States oil companies pressured the United States government to embargo all imports from Mexico in order to discourage similar nationalizations in other countries. The boycott was in effect briefly, but the United States government soon pressured the oil companies to come to terms with Mexico as a result of President Franklin D. Roosevelt's Good Neighbor Policy and United States security needs arising from World War II. In 1943 Mexico and the oil companies reached a final settlement under which the companies received US$24 million (a fraction of the book value of the expropriated facilities) as compensation. Nevertheless, the oil nationalization deprived Mexico of foreign capital and expertise for some twenty years.

In August 1993, it became known that the government was considering proposals to allow private companies to buy, sell, and distribute imported gasoline, natural gas, and petrochemicals, and to invest in new pipelines. Although the government reiterated in 1992 its longstanding pledge not to denationalize the oil industry, some observers viewed the reorganization of Pemex as a move to improve the company's efficiency and profitability as a prelude to privatization. Denationalization would require amending the constitution of 1917, which mandated state ownership and exploitation of hydrocarbons.

[Patrick Degan]

ahh minor point - http://countrystudies.us/mexico/78.htm

To my understanding Mexico has already nationalized their oil infratsrtucture, production, etc.. and has not denationalized it, though I could be horribly behind the times.

Well then obviously Mexico would have to be liberated from its Communist government and its people introduced to the benefits of freedom no matter how many of them we have to kill along the way and of course for the additional small exchange of several big oil companies "managing" their newly liberated Freedom Oil Wells, naturally...

[Lord of the Abyss]

ahh minor point - http://countrystudies.us/mexico/78.htm

To my understanding Mexico has already nationalized their oil infratsrtucture, production, etc.. and has not denationalized it, though I could be horribly behind the times.

Well then obviously Mexico would have to be liberated from its Communist government and its people introduced to the benefits of freedom no matter how many of them we have to kill along the way and of course for the additional small exchange of several big oil companies "managing" their newly liberated Freedom Oil Wells, naturally...

That was more or less my first thought, although I expect there'd be less talk about Communism, and more talk about Mexico being a hotbed of terrorism. By sheer coincidence, the terrorists would be camped over the oil fields . . .

[J]

ahh minor point - http://countrystudies.us/mexico/78.htm

To my understanding Mexico has already nationalized their oil infratsrtucture, production, etc.. and has not denationalized it, though I could be horribly behind the times.

Yes, but they don't and won't have the expertise and resources to take full advantage of the hypothetical oil find for many many years. It takes a long time to build & setup the drilling rigs along with the pipelines and distribution facilities. It's almost certain they'll be forced into a partnership with one or more of the Big 4, that is unless they want to risk having their economy ruined. Remember, the Big 4 have a lot of political clout and they could likely make life quite hard for Mexico, much like their predecessors did with Iran.

[theski]

America quickly devotes billions to horizontal drilling technology.

We do that very well already