The Energy Reform and the Oil Problem in Mexico
Journal Title: Revista CEA - Year 2021, Vol 7, Issue 13
Abstract
After the Mexican oil expropriation, Petróleos Mexicanos (PEMEX) initially experienced the take-off of the industrial sector; but, since the 1970s, the company has mainly served two purposes: to make a profit and to contribute to fund government spending through taxes. Today, this oil company is facing a deep crisis. The aim of this study is to shed light on the origins of the current energy crisis of the country and propose different possibilities to address it. Using official data provided by the INEGI and PEMEX, we found that, in recent decades, the public finances in Mexico have greatly depended on oil revenue and, as a consequence, PEMEX has not been able to carry out the investment projects needed to maintain or increase their production. This has contributed to further the production decline, creating the right circumstances for an energy reform that attracts private investors to this sector. We conclude that a possible alternative to avoid the privatization of such a strategic natural resource as oil is passing a tax reform that increases non-oil-related tax revenue, thus enabling PEMEX to fund the investments needed to tackle the production decline.
Authors and Affiliations
Bruno Sovilla, Eusebio Gómez-Ramírez, Manuel Sánchez-Pérez
Keywords
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- EP ID EP697630
- DOI 10.22430/24223182.1631
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