4 CAUSES OF THE ENERGY CRISIS IN MEXICO - CULTURE VOCABULARY - 2025

The causes of the energy crisis in Mexico are linked to the collapse of oil prices in recent years, as well as a drop in production.

This fact has caused the State to have received less profits. In this way, the percentage of income that this raw material represented has fallen from more than 30% to just 14% in just three years.

These events have caused an economy that has been as dependent on oil as the Mexican one, to suffer an energy crisis associated with the economic one.

It is not only noticeable in the cancellation of infrastructure projects, but even in the rise in prices of products such as gasoline or gas, which greatly affect the general population.

C

Although the reduction in oil prices has affected the entire planet, its effects have been greater in those countries with a strong economic dependence on this hydrocarbon.

Since the second half of 2014, the fall in prices has been continuous, especially due to excess supply.

For Mexico, with a high percentage of the income coming from this product, the consequence has been a decrease in the foreign exchange that came in from its sale.

In addition, the increase in extraction in the United States has meant that this country will no longer need to buy abroad, which has affected what was one of its main suppliers.

2- Drop in production

Another cause of the energy crisis in Mexico is the great decrease in oil extraction.

In 2017, it fell below 2 million barrels a day, something that had not happened for 40 years. Even being the eleventh world producer, the figures show a worrying decrease.

Specifically, Pemex, the company in charge of everything related to this hydrocarbon in the country, confirmed that it has extracted 9% less than the previous year. In total figures they mean 1.94 million barrels per day.

The causes of this phenomenon range from the depletion of some deposits, to the attempt to increase the price by reducing the supply.

3- The lack of modernization of the industry

For several decades, it has been pointed out that the Mexican extractive industry needed urgent modernization.

Many of the methods and machinery that continue to be used have become outdated and more so when many new deposits are found in the seabed. This is not only the case with oil, but also with gas.

In addition, much of the oil has been sold in crude form and has been bought back after being processed in other countries. This means that being a producing country, Mexico has paid for someone to convert its oil into, for example, gasoline.

To ensure that the infrastructures are modernized, the Government has opened the market to private foreign firms.

In this way, according to the 2017 data, it already has confirmed 70,000 million dollars of investment by these companies.

4- Dependence of the oil economy

The dependence that the Mexican economy has had on its star product, oil, makes the current energy crisis have more serious effects. The lack of studies to find alternatives means that there are no short-term solutions.

According to experts, it is unlikely that the country will be able to return to the production of previous years. In addition, the United States, its main customer, can become self-sustaining.

References

1. Gil Valdivia, Gerardo. The crisis of the energy sector in Mexico. Obtained from moneyenimagen.com
2. Duloy, J.; Hazell, Peter; Norton, R. Agriculture and the energy crisis: a case study in Mexico. Recovered from documents.worldbank.org
3. Woody, Christopher. Mexico's struggling oil sector is in 'the eye of the hurricane'. Retrieved from businessinsider.com

4. Barrañon, Armando. The Mexican oil crisis in the scenario of high oil prices. Obtained from razonypalabra.org.mx
5. Lang, Jason. Mexico warns of energy crisis without overhaul. Retrieved from reuters.com