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A different sort of Mexican cartel

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By See-Dubya  •  June 29, 2008 06:20 PM

Very interesting look at the problems of the Mexican oil industry over at Townhall. It’s not really their usual format–not that there’s anything wrong with their usual format, they’ve got a top-notch stable of columnists over there, and it’s a daily stop for me–but this is longer and wonkier than a lot of their usual writers.* I like it because it’s a great introduction to the problems in the energy production of our number-three source of imported oil.

You won’t be surprised to learn that most of those problems stem from politics–specifically, a nationalized oil industry like the one some Democratic congressmen are advocating for our country. It’s a great exposition of why nationalizing an industry doesn’t crimp profiteering– people are still making vast fortunes off Mexican oil; they’re just doing so under the table. And despite the high price of oil right now, because of the endemic corruption in the system, Pemex isn’t making very much money.

The politics, by the way, are fascinating. I didn’t realize that the date of the nationalization of the industry is celebrated as a national holiday. That’s a clever way to maintain your monopoly–make it a matter of patriotism.

Incidentally, it’s not just Mexico’s economy, our own nationalization debate and our price at the gas pump that are affected by Pemex’s monopoly. It reaches another issue of interest to this blog:

Put another way, if prices were to dramatically drop, the Mexican government would have to increase subsidies to Pemex (the company needs $9 billion right now just to repair infrastructure), and raise taxes on everyone else, lest it be unable to provide many basic services. Take heed, America: Such a scenario may trigger even more immigration, including the illegal kind, to our country, in turn further raising pressure for amnesty. Mexico’s oil industry corruption is our problem, not just theirs.

*Most of their daily updates are newspaper-length columns, which are usually written within a tight word count to fit in dead-tree papers.

__________________

{Post by See-Dubya. More about the Pemex pipeline bombings here.}

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