2009 March 01 Sunday
Mexico Oil Production In Steep Decline

Declining production from oil depleted oil fields operated by Pemex mean that Mexico is only a few years away from ceasing to be an oil exporter.

Mexican state oil monopoly Petroleos Mexicanos produced an average of 2.68 million barrels of crude oil per day in January, down 9.2 percent from the same month last year.

Mexico's oil export decline is sharper than its production decline due to internal consumption growth. The internal consumption combined with the production decline will bring a halt to Mexico's oil exports in a few years.

Mexico's oil production decline is part of a larger pattern of oil production decline by non-OPEC oil producers.

There are simply too many non OPEC countries with declining production which cannot be offset by increasing production of about 0.50 mbd in 2009 from non OPEC countries including Australia (0.04), Azerbaijan (0.02), Brazil (0.19), Canada (0.10), Kazakhstan (0.07), Sudan (0.04) and Vietnam (0.04). Production declines in 2009 from Mexico (0.24), Norway (0.21), UK (0.19) and Russia (0.26) are expected to be about 0.90 mbd which is greater than the 0.50 mbd increase. Consequently, I am forecasting non OPEC-12 crude, condensate and oil sands production to be 41.0 mbd in 2009, 0.3 mbd down from 2008 and 1.1 mbd down from the 2004 peak of 42.1 mbd. The annual decline rate is expected to increase in 2010 because Australia, Brazil, Sudan and Vietnam are not expected to provide a production increase.

Since a large (though obviously declining) fraction of the Mexican government budget comes from oil exports this decline in production will further weaken a government already challenged by narco-paramilitaries and corruption. The United States should build a formidable barrier along the entire US border with Mexico in order to better insulate ourselves from worsening conditions and increasingly lawlessness in Mexico. Mexico's government has managed to maintain control even under severe economic conditions in the 1970s and 1980s. But we need to insulate ourselves from the possibility that Mexico could implode.

Drug violence is way up in Mexico.

- In 2008, 6,000 people died in drug violence in Mexico, according to President Felipe Calderon. This was almost double the 3,042 who died in drug-related violence in 2007.


- In 2006 in the United States, 794 of the reported 14,990 homicides in the United States were narcotics related, according to the Federal Bureau of Investigation (FBI).

The article reports that more than a quarter of Mexico's drug-related homicides took place in Ciudad Juarez, on the border with Texas. If we got control of the border and made drug trafficking much more difficult then the drug business would shrink and northern Mexico would become more peaceful.

In Cuidad Juarez 250 have been killed in February alone. That translates into an annual rate of 3000 for just that city.

The drug war and the decline in Mexico's oil production make that country a growing problem for the United States. We should stop the flow of illegal aliens across the border and cut legal immigration from Mexico.

A big recent arrest of Mexican drug traffickers in the United States highlights the importance of keeping Mexican criminals out of the United States. If they were not here they would not commit crimes here.

WASHINGTON Today Attorney General Eric H. Holder Jr., announced the arrest of more than 750 individuals on narcotics-related charges and the seizure of more than 23 tons of narcotics as part of a 21-month multi-agency law enforcement investigation known as "Operation Xcellerator." The Attorney General was joined in announcing the current results of Operation Xcellerator by DEA Acting Administrator Michele M. Leonhart.

Today, 52 individuals in California, Minnesota and Maryland were arrested as part of Operation Xcellerator, which targeted the Sinaloa Cartel, a major Mexican drug trafficking organization, through coordination between federal, state and local law enforcement, as well as cooperation with authorities in Mexico and Canada.

Mexico drug cartels wouldn't have big criminal networks in the United States if we had a lot fewer Mexicans in the United States. Keep Mexico's problems south of the border. We have enough problems of our own.

Share |      By Randall Parker at 2009 March 01 06:30 PM  Mexico

Ned said at March 2, 2009 5:58 AM:

Earlier this year I attended a presentation by some American Christian missionaries who had spent a month in Ciudad Juarez. What they described was frightening. Everyone stayed inside behind locked doors after dark. There was frequent gunfire at night. Ordinary people were kidnapped off the street and held for ransom (usually around $1000). Thugs tried to extort tuition money from Christian schools, threatening to kidnap the children. One weekend there were 21 murders.

If Mexico collapses, millions of her citizens may try to get into the US. This will create an enormous problem. President Obama's first major foreign policy test may not involve sove distant nation such as Pakistan, Iran or Russia. It may be our neighbor to the south that gives him his first big challenge.

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