David Frum

02.28.13

Mexico (Sort Of) Liberalizes Its Oil Industry

OMAR TORRES/AFP/Getty Images ()

Mexico relies on 1/3 of its government revenues from national oil company Pemex. Yesterday, they announced they'll be inviting foreign investment to expand production:

In what would be a historic step, Mexico's ruling party is expected to modify its political statutes Sunday to allow private investment in state oil monopoly Petroleos Mexicanos and the possibility of the party supporting value-added tax on currently exempt food and medicines. ...

The proposal amends an article approved in 2008 in which the PRI said the state should maintain the "property, management, control and fruits" of the oil industry under Pemex. The PRI would reiterate its defense of constitutional articles that establish a national oil industry, the party member said.

A reform to increase private involvement in the oil sector is one of the key promises of Mr. Pena Nieto to unleash economic growth. Government officials estimate an energy reform could add two percentage points to annual economic growth, but critics see it as a transfer of oil income to foreign firms.