Energy and Sustainable Development in Mexico

Contents

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pp. 6-

Preface

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pp. vii-ix

This book is the result of collaborative research conducted during 2002 and2003 and the subsequent analysis of data. It is an account of the requirementsfor achieving sustainable development in Mexico. It also provides a detailedeconometric analysis of productivity and the requirements for sustainable de-velopment of energy resources. Growth in energy, chiefly oil and natural gas,...

1. Introduction

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pp. 3-14

Vicente Fox, leader of the National Action Party (PAN), was elected president of Mexico in 2000, largely because he was seen as a “president of change.” Before his election, the country had been ruled for seventy consecutive years by the Institutional Revolutionary Party (PRI). President Fox presented visionary proposals for sustainable development, organized into four major goals: ...

2. Energy, Capital, and Productivity

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pp. 15-24

This chapter analyzes aggregate labor productivity in Mexico for the years 1965 –2000. These thirty-six years were marked by sharp contrasts. From 1965 to 1979, real gross domestic product (GDP) per worker increased at an average annual rate of 3.7 percent. From 1979 to 2000, however, productivity stagnated, and only in 2000 did it recover to the level of 1979. What are the reasons for such ...

3. PEMEX Finances:Revenues and Taxes

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pp. 25-38

To understand Mexico’s oil and gas industry, one must first understand PEMEX finances. As a state-owned company, PEMEX controls neither its revenues nor the taxes it pays. The federal government determines both of these. Moreover, the federal government also largely determines how PEMEX allocates revenue among its many activities—exploration, development, production, exports, ...

4. Exploration and Development Drilling

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pp. 39-52

Chapters 4 –7 develop an integrated model of oil and gas supply in Mexico. The model is based on earlier work by Moroney (1997), who specifies a vertically integrated system of reserves and production in Texas. A major advantage of the integrated system is its transparency. The links between exploration and development drilling, successful drilling, gross reserve additions, reserves, and ...

5. Successful Exploration and Development

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pp. 53-62

Successful drilling is the essential source of new oil and gas reserves. It is the foundation of future production. Without successful drilling, reserves and future production must inevitably decline. This chapter analyzes successful exploration and development from 1975 to 2000. PEMEX reports the number of exploration and development wells drilled annually, along with the successful ...

6. Additions to Oil and Gas Reserves

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pp. 63-76

Oil and gas reserves are economically producible inventories. They are not simply oil and gas “in the ground.” Instead, they are deposits that can be drilled with a reasonable prospect of profit under current technological and economic conditions. Reserves are the basis of current and future production. They can be augmented only by successful exploration and development and are depleted by ...

7. Production Models

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pp. 77-90

Here we specify and estimate oil and gas production models. Chapter 6 reviews production and reserve trends and analyzes models of exploration and development. We now link current-year oil production to reserves lagged one year and to lagged production. The connection between production and reserves is based on a model developed by Robert Pindyck (1978). Pindyck’s model applies ...

8. Simulating the Integrated Oil and Gas Supply Model

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pp. 91-102

The Fox administration understands the urgency of developing oil and gas reserves. Chapter 1 shows that these fuels dominate Mexico’s commercial energy and are the only realistic hope for increasing it in the future. Oil and gas are two pillars on which many of the goals of sustainable development ultimately rest. For this reason, Congress approved vastly larger drilling budgets ...

9. Conclusions

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pp. 103-108

The United Nations World Summit on Sustainable Development in Johannesburg, South Africa (August 26 –September 6, 2002), reaffirmed two principles of sustainability: to eradicate poverty and to protect the environment.¹ This book is chiefly devoted to Mexico’s oil and natural gas as two foundations for sustainable development. Although we focus on oil and gas, sustainable development rests on much broader foundations: ...

Epilogue

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pp. 109-112

Several changes affecting the energy sector of Mexico and the country’s prospects for sustainable development have occurred since we wrote the foregoing chapters analyzing the period 1975 –2000. The following is a brief discussion of some of the most important developments, together with their implications for the future. ...

Appendix

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pp. 113-126

Notes

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pp. 138-143

References

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pp. 133-138

Index

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pp. 139-142