Crude oil production and revenue are essential elements to a stable Mexico. The Rice University James A Baker Institute for Public Policy Energy Forum has just presented a compressive study on “The Future of Oil in Mexico.” It was financed by 36 companies and individuals. It is a collection of several hundred pages of individual studies by eleven authors on the key issues regarding Mexican oil.

The spirit of the report is to raise the issue now is time for Mexico to debate the future of their Mexican Oil Policy. The report does not tell Mexico what to enact and it does not give 10 essential steps to avoid a great disaster.

Basically, the Mexican federal government takes 91% of the national oil company PEMEX’s profits for 37% of the federal budget. For this reason PEMEX has been unable to replace its quality crude oil reserves. The major production has come from the offshore Cantrell l field, with has a rapid production decline curve. In 2004 Mexico produced 3.9 million barrels a day (b/d) and in 2010 the production had fallen to 2.98 million b/d. In 1971 the oil consumption in Mexico was 500,000 b/d and in 2009 it had risen to 2.15 b/d. In 2009 Mexico exported less than 1 million b/d. Mexico today is a major importer of gasoline and other refined products.

The studies present two scenarios- the positive scenario in which Mexico has 10 years to resolve the oil production issues and the negative scenario in which there are only a few years before the oil production crisis hits Mexico.

Basically, Mexico has not allowed foreign ownership of oil. The policy prevents foreign capital and technology to develop Mexican oil fields. The studies look at Brazil which had a comparable policy several years ago, but changed the policy to allow massive foreign investment to develop Brazil oil production.

The Baker Institute “The Future of Oil in Mexico” is a seminal study on the coming Mexican financial crisis. It is a totally predictable crisis. The only issue is the timing. Will the crisis hit in ten years or in the coming few years?

Mexico is the most important foreign policy issue for the United States. This is a fact which often is not recognized in Washington DC.

Mexico is a major trading partner. It is essential to have a stable Mexico.

Imaging Mexico with 37% of the federal budget unfunded?

Imagine PEMEX defaulting on its massive debt? Imagine Mexico as a major crude importer?

Mexico is beginning to revise their oil and gas investment laws.

Mexico is planning to build more refineries. The issue is will Mexico make the necessary changes to avoid the coming oil production crisis?

All these reports are on line at the following web site.