Untapped oil, overtapped politics
High pump prices can be traced to oil exporters such as Mexico that play politics with oil.
Americans need only look over the border to see a reason for geyserlike spurts in gasoline prices. Mexico, the third-biggest oil exporter to the US, saw crude production fall 7.8 percent over the past year. As in many oil exporting countries, the crux of the problem isn't below ground.
Mexico's state-run oil monopoly, Petróleos Mexicanos (Pemex), badly needs more foreign technical help, especially to drill in waters up to two miles deep in the Gulf of Mexico. But after President Felipe Calderón introduced such a politically explosive reform in April, leftist lawmakers shut down Congress for two weeks until last Friday, citing Pemex as the symbol of nationalist dignity.
Mexico's oil exports could dry up, possibly within five to nine years, as domestic demand rises and output sags for lack of modern oil expertise. Even with the record prices for world oil, Pemex managed to lose money last year. The government, which relies on this monopoly for more than a third of its revenues, faces a coming spending crisis. And a resulting economic slump could push more Mexicans to migrate northward.
Despite all that, leftist protests against a foreign boost for Pemex continue in the streets, with threats of illegal action in the offing.
In much of the oil-producing world, political temptations to control petroleum assets at the expense of market efficiency have helped slow new production.