Living with Oil: Promises, Peaks, and Declines on Mexico’s Gulf Coast

1. The Mexican Oil Crisis

In an oft-quoted and very memorable line of his 2006 State of the Union speech, George W. Bush proclaimed, “America is addicted to oil . . . which is often imported from unstable parts of world.” Bush’s comment struck a chord for an energy-dependent America at the height of the Iraq war. As a nation, the United States was consuming more than 20 million barrels of oil per day. Less than 5 percent of the world’s population consumed nearly a quarter of total global supply. To fuel its high energy consumption, the United States imports a large volume of hydrocarbons including crude oil. For more than fifty years the United States has cultivated dependence on energy imports and along with it, a highly politicized rhetoric on the nation’s foreign oil dependence. For most of his audience that evening, still deeply mired in the aftermath of 9/11, the war in Iraq, the uncertainty of Afghanistan, and the spatial politics of the war on terror, Bush’s use of “unstable parts of the world” was a very specific allusion. Without a doubt, Bush meant to evoke discomfort in listeners about the ongoing insecurity of the Middle East. Would the 2006 State of the Union address have been received differently if the famous “addicted to oil” line were accompanied by a graphic demonstrating the actual foreign suppliers of oil, a pie chart, perhaps, clearly showing North American neighbors Canada and Mexico as top oil suppliers to the United States? When politicians, pundits, and others pontificate about the real, invented, and hyperbolized dangers of America ’s reliance on foreign oil, Mexico is not the first “foreign source” that comes to the average citizen’s mind.1 Whatever Mexico has been guilty of or blamed for in the past few years—illegal immigrants, drug-cartel violence, swine flu—it certainly has nothing to do with either maintaining or endangering America’s energy security. Certainly no one thinks CHAPTER 1 The Mexican Oil Crisis Sources of U.S. crude oil imports, 2006. Source: EIA n.d. U.S. crude imports from Mexico, 1975–2010. Source: EIA n.d. The Mexican Oil Crisis 31 of Canada as a big bully on the global scene of energy geopolitics. The fact is that America’s closest and usually most compliant neighbors, not far-flung and menacing threats, have long been supplying the foreign oil to the United States’ helplessly fossil-fuel-dependent lifestyles.2 But at the very moment George W. Bush made his famous pronouncement promising to reduce America’s dependence on foreign oil, Mexico—the number two supplier of U.S. oil imports—was indeed becoming an unstable part of the world. Adding to mounting concerns over the country’s compromised security at the hands of narcoviolence, especially on the U.S.-Mexican border, Mexico was falling into an energy crisis. At the outset of 2006, news was breaking that Cantarell— Mexico’s key producer—had declined by 13 percent in the previous two years. Even worse was the overall state of Mexico’s petroleum sector. Along with the drop in production was a plummeting replacement rate, which fell by more than 17 percent over the same period. Pemex’s replacement rate into its reserves had dropped to 49 percent—less than half a barrel for every barrel extracted (Cardoso 2006). For the United States, the world’s largest oil consumer, the quest for secure sources of foreign oil is a decades-long preoccupation. The United States, in conjunction with multinational companies, has looked to Mexico twice over the past century as a source for easy-to-access oil. The first time was during the golden age of the Mexican oil industry (roughly 1911-1922), when U.S. and other foreign companies were heavily invested in discovering and extracting millions of barrels of crude from inside Mexico’s national territory, mostly on the Gulf coast of Veracruz. This period culminated in the expropriation and nationalization of the oilfields and industry on Mexican territory by President Lázaro Cárdenas in 1938. The second time the United States secured Mexican oil was in the early 1980s. Following the loss of confidence in Middle Eastern and OPEC suppliers after the oil shocks of the 1970s, the discovery of Cantarell provided the United States with the opportunity for a major, non-OPEC, Western Hemisphere supplier.3 Cantarell’s crude put Mexican...