In The News
SECURITY DEBRIEF: Mexican Energy Reform is Gateway to U.S. Security
Mexico ,
September 8, 2015
When we talk about border security, we often focus on what the United States should do to stop illegal crossings. Less often discussed, however, is what can be done in Mexico (and elsewhere in Latin America) to dampen the desire to illegally enter the United States in the first place. One surefire way to achieve this: economic development.
Today, Mexico’s energy sector is experiencing a renaissance. Since 1938, the country’s energy resources were controlled by the state-owned oil company Petroleos de Mexico (Pemex), but facing declining production and insufficient extraction and refining technologies, Mexico is in the midst of implementing ongoing reforms that open oil and gas exploration to foreign companies. In fact, the first exploration and production contacts are already awarded. The direct and indirect effects from energy reform will create economic vitality at a level never before seen in Mexico, and it has the potential to enhance American security in three primary areas.
Discourage Economic Migration: Private sector energy exploration will create new jobs for Mexicans, both in the energy industry itself and in the professions that support increased industrial activity (such as food and lodging, mechanical maintenance, transportation, etc.). Meanwhile, the enormous revenue earned from energy companies can be used to build and upgrade national infrastructure.
Mexican President Enrique Peña Nieto has said he will direct $100 billion from public and private investments towards enhancing Mexico’s communication and transportation infrastructure, which will create jobs and economic opportunity. A stronger Mexican economy and job market will inevitably decrease the number of economic migrants coming into the United States, particularly if U.S. immigration laws are rigidly enforced, border security is strong, and American businesses do not employ illegal aliens. Disrupting Cartel Activity: Agrarian or economically depressed areas offer little hope for Mexican citizens, which is why drug cartels are often successful in recruiting people from these areas. They offer a job where people struggle to find work. But energy reform offers an alternative. It gives hope where there is none, beginning to beat back the cartels’ ability to continually replenish its ranks. The energy reform also motivates the Mexican government to more aggressively prevent cartels from disrupting the country’s energy production. Illegal activity can impact current and future private-public operations that may also dissuade future foreign investment in Mexico’s energy sector, jeopardizing hundreds of billions of dollars in revenue.
Enhancing North American Energy Security: The United States is the world’s largest producer of oil and natural gas. With a robust oil refining industry and fast-growing natural gas sector, the United States produced 90 percent of the energy we used last year, pumping out 1.6 million barrels of refined oil a day. And we still have 2,266 trillion cubic feet of natural gas waiting to be extracted. Pair that energy production with Canada’s Athabasca oil sands and Mexico’s reformed energy sector, and the North American continent could be completely energy independent. But of course, the Obama administration’s myopic and naïve “just say no” philosophy on energy development means we will continue to purchase crude from countries that hate us rather than pursue the job-creating, revenue-generating activities that come with extracting, refining and transporting oil and gas.
One positive development came this month as Congressmen Will Hurd (R-TX) and Henry Cuellar (D-TX) convinced Commerce Secretary Penny Pritzker to accept a proposal from Pemex to trade Mexican heavy crude with American light crude. Under a Cold War-era law, it is illegal to export American crude (though it is legal to sell refined petroleum products). Yet, U.S. refineries are largely equipped to process heavy crude (like Mexico’s), whereas Mexican refineries are geared toward processing light crude (like America’s). This proposal is a perfect example of how the United States, Mexico and Canada can develop energy synergy, satisfying energy needs without ever looking across an ocean.
Hurd and Cuellar’s victory is a good first step but the volume of crude that can traded under this agreement is pathetically small — a mere 100,000 barrels a day. If we are serious about taking part in Mexico’s energy renaissance (and we should be), and if we want to achieve North American energy independence (and we need to), we should liberate ourselves from prohibitions on crude exports. It would generate billions of dollars a year in oil revenue and would accelerate the Mexican jobs and infrastructure gains that have a real impact on illegal immigration, border security and the wellbeing of the American and the Mexican people.
Nelson Balido writes primarily about border security and U.S. immigration policy.
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