The key to U.S. energy security
lies in the region. Yet most of the
reserves lie in difficult places,
including under the jurisdiction of
inefficient state-run companies.
By Lisa Viscidi
While the U.S. cannot eliminate supply has plummeted since 2005. oil production, particularly in Mex-its dependence on all foreign oil, it Why? The answer is, unfortu- ico and Venezuela, respectively the
would be foolish to ignore the still- nately, politics. Over the past de- third and fourth largest suppliers to
untapped potential closer to our cade or longer, many Latin American the United States.
doorstep. But that, in turn, will re- countries have adopted policies of
quire U.S. policymakers to spend “resource nationalism” that are po- Mexico Holds the Line
political capital on removing some litically popular but have generated Fervent nationalism still dominates
of the current obstacles to tapping poor results. The nationalization of the debate over Mexico’s oil indus-hemisphere reserves, such as the oil industries was a response to wide- try, 70 years after President Lázaro
growing movement towards nation- spread perceptions that private-sec- Cárdenas expelled foreign oil compa-alization in many countries, and to tor companies were acting against nies. The expulsion is still regarded
pursue a policy that encourages a sovereign interests and that, partic- as a historic step in Mexico’s strug-cooperative and mutually benefi- ularly in countries with acute levels gle to assert political and economic
cial relationship between govern- of poverty and inequality, only gov- independence from the U.S., with
ments of the Americas and private ernment control could ensure that polls consistently showing that most
industry. oil wealth was distributed fairly. Mexicans remain opposed to priva-
AP Photo/LesLie MAzoch
The Western Hemisphere cur- Whether or not that argument is tizing Pemex, the state oil monop-rently provides more than half of correct, nationalizing governments oly, which controls oil exploration
U. S. crude oil imports of 9. 7 million have made the situation worse by and production.
b/d. Canada is the single largest ex- failing to provide the resources and The decades of oil nationalism
porter, with more than 1. 9 million infrastructure that would enable have hurt production, which has
b/d according to EIA figures released them to reap the supposed benefits been in steady decline since its peak
in February 2009; but Latin America of nationalization. in 2004. Pemex lacks the capital,
is a substantial player. Combined ex- By sidelining private investment human resources and technologi-ports from Mexico, Venezuela, Ecua- without allocating state funds to re- cal capabilities to tap deepwater re-dor, Brazil, and Colombia approach 3 place it, many countries are killing serves in the Gulf of Mexico—widely
million b/d, or nearly 30 percent of the goose that lays the golden egg. deemed Mexico’s most promising ge-U.S. consumption. This figure could While resource nationalism has un- ology—due to years of underinvest-easily rise: Latin America holds vast doubtedly boosted government cof- ment and mismanagement.
unexploited supplies of oil and gas, fers and introduced state revenues Although Pemex claims it can pro-estimated at 110 billion barrels, or 8 that in many cases have benefited duce 500,000 b/d in deep waters in
percent of global oil reserves. the population more broadly, such the next 10 years, the lack of ade-
Yet , Lati n A merica’s tota l oi l policies have also taken their toll on quate financing makes this doubtful.
spring 2009
americas quarterly 33
