Here’s a pragmatic yes/no proposition about fossil fuels:
The Pemex Conundrum: Shallowest Ethical Layer Possible
Pemex = dirty, inefficient, intensively polluting state oil monopoly of Mexico. Recently, there was an energy reform to allow foreign fuels to compete with Pemex. American and European refined products are much cleaner and refined with much less waste. On the barest level, it’s both good for the environment and Mexican energy consumers to have an alternative to Pemex.
The Pemex Conundrum: Somewhat Deeper Analysis
But that’s not to say it’s all good. Mexico is a developing country, and the energy reserves belong to the Mexican people (unlike in the USA). Their inability to extract and profit off of their energy reserves is an economic hindrance to Mexico that countries like the USA, Canada, Norway, and UK haven’t suffered. We got rich and were able to invest in renewables partially because we extracted all of this energy in the past. Furthermore, lower energy prices in Mexico mean more energy consumption in the short term, which is bad from an environmental perspective but good from an economic perspective.
As another factor, a lot of Mexico’s current cartel issues go back to Pemex, which faces major challenges with corruption, theft, tapped pipelines, stolen gasoline, etc. Guanajuato is currently Mexico’s most violent state, and the reason is the convergence of pipelines and Pemex refinery in Salamanca, which has been a major source of cartel profits and cause of cartel violence.
The Pemex Conundrum: Fundamental Level
If foreign energy flows into Mexico unabated, there is a decent likelihood that Pemex never solves its extraction, refinement, and corruption issues, and Mexico’s energy reserves largely go unextracted. It’s somewhat Machiavellian to think about a developing country’s economic future this way, but isn’t that more in service of fighting global warming than anything? Ultimately, someone has to take the hit and never exploit known fossil fuel reserves.
(Under both scenarios, some risk exists that a future partnership will allow Pemex to properly solve its extraction and refining issues. Probably more risk in the Pemex-only scenario, but it could happen either way.)
So what’s the conclusion?
- North American and European companies should sell fuels in Mexico, to the competitive detriment of Pemex.
- North American and European companies should refrain from selling fuel in Mexico, leaving Pemex to do its thing.