Mexican Oil: Prized Resource

In Mexico, oil has been king and national cash box throughout the 20th Century. Commercial production began in 1901, and for the next 25 years Mexican wells produced a fourth of the world’s oil. But much of the profit went into the pockets of foreigners, big American and British oil companies and others that dominated the industry.

By the 1930s, Mexico’s share of the world market was dropping as some of its oil reservoirs were depleted and the big Texas and Middle East oil fields began to dominate. With revenue falling, tensions grew and wage disputes broke out between the workers and their foreign employers. The stage was set for the pivotal event in the history of Mexico and its oil industry.

Under his battle cry “Mexico for the Mexicans,” President Lazaro Cardenas expropriated the foreign oil operations in March, 1938.

“In how many of the villages bordering on the oil fields is there a hospital, or school or social center, or a sanitary water supply, or an athletic field, or even an electric plant fed by the millions of cubic meters of natural gas allowed to go to waste?” he challenged in a radio address.

“Another inevitable consequence of the presence of the oil companies, strongly characterized by their antisocial tendencies . . . has been their persistent and improper intervention in national affairs.”

With that, all oil operations in Mexico were nationalized. The British and American firms were paid off, and production, processing and sale of Mexican oil and gas was turned over to the new national oil company, Petroleos Mexicanos, known as Pemex.

The Numbers

Pemex provides the Mexican government with about $17 billion a year in tax revenue from oil production and fuel sales. Petroleum still accounts for almost a third of the country’s foreign hard-currency income.

In 1993, Pemex provided 30.2% of Mexico’s export earnings. It ranks as the world’s fifth biggest oil company on the basis of sales.