Mexico’s Energy Potential Is a Game Changer
During the summer of 2014, it was impossible to turn on the TV or look at social media without seeing mention of the border crisis related to an influx of immigrants from Central America. Passions ran high as one side focused on unaccompanied children, calling border-security advocates inhumane, while the other side portrayed the influx as an invasion that would cause disease epidemics and tear at the fabric of our society. As the debate raged on and solutions ranging from amnesty to walls were discussed, I found myself asking, "How can we reshape this conversation and move in a positive direction?"
As chairman of the Railroad Commission of Texas, I have an up-close view of the Texas energy industry and a strong sense of the potential strength of that same industry on the other side of our southern border. Mexico not only shares a cultural past and a strong trading relationship with Texas, that country of some 122 million people also has access to many of the same geological formations that are driving the resurgence of our energy industry.
Mexico’s energy industry has been implementing a set of sweeping reforms aimed at increasing transparency, competition and growth that will better enable it to capitalize on its access to these major energy reserves. These energy reforms are part of a larger push by President Enrique Peña Nieto to reform Mexico’s banking, taxation, education and infrastructure situation. As these changes begin to increase production capacity, Texas is a ready source of the expertise that has made places like the Permian Basin, the Eagle Ford Shale and others so successful. This opens the possibility of even greater cross-border cooperation, investment and success.
The U.S. Energy Information Administration has analyzed the potential in the Mexican oil fields and projected they will draw upwards of $10 billion dollars of foreign direct investment and create half a million new jobs for Mexico by 2018. That surge in employment will not only have a massive impact on the Mexican economy, I believe it can slow the stream of people crossing the border illegally to find work. In fact, it might just cause some southbound migration as American energy professionals educated and trained in Texas seek opportunity there.
In order to reach its full potential, the Mexican energy industry will require significant investments in infrastructure, from roads and pipelines to water and electricity. To encourage infrastructure investments, the Mexican government will have to ramp up its emphasis on public safety by breaking the drug cartels’ grip on so many regions and making the rewards of the drug trade less attractive. If any industry is capable of outshining the lure of the narco-economy, it is most certainly the energy industry. In time, with increased stability and predictability flowing from the current culture of reform, those necessary investments will be much more likely.
As Texas continues to work with its southern neighbor to combat the challenges brought on by the cartels and transnational gangs on both sides of the border and the overall immigration debate continues, I encourage my fellow Texans to consider what we can do to change the tone of the conversation.
If we can move from a mindset of fear toward one of cooperation and collaboration, we will be well on our way to a mutually beneficial future. When we can measure our success in job creation, reduced crime, stabilized migration and less dependence on Middle Eastern oil, Texas and Mexico will be even stronger neighbors and economic partners.
Craddick is chairman of the Texas Railroad Commission.