International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Mexico’s Energy Reform: Inconsistencies after Four Years of Operation
Roberto Gutierrez-R.

The 2013-2014 energy reform represents a breakthrough to the long-lasting energy state-monopolies inaugurated in 1938 with the hydrocarbon industry. The new two-tier structure involves the coexistence of one large but diminishing public enterprise in both hydrocarbon and power industries and many international companies acting alone or in association with small-sized domestic firms. With such a structure, the expectations are that the Mexican energy sector becomes a new vehicle for economic development, mainly based on hydrocarbons exploration, exploitation and transformation, and on cheap electricity prices. After nine auction exercises in the hydrocarbon industry and three in that of power, carried out between 2015 and 2018, which allow large and mid-sized international oil companies to explore and exploit onshore, shallows and deep-water hydrocarbon recourses, and international power companies to take large amounts of power into the grid, foreign investment does not start to flow as the reform expected. The only changes the sector has undergone so far are in the areas of fuels imports and retail sales. Though the international market remains a buyers’ one, and prices recuperate slowly, companies should feel encouraged to initiate the projects they were committed to, so reinforcing Mexico’s oil, gas and derivatives production, rather than making profits by importing gas and fuels. To avoid private companies determine national energy policies and have a disproportionate influence on macroeconomic decisions, regulations ought to be clear and the state be committed to enforce them.

Full Text: PDF