By Dave Anderson:
The Wall Street Journal (h/t Agonist) that Mexico is seeing its largest single point of hard currency earnings, the Cantarell off-shore oil field, collapse faster than expected.
Output at state-owned oil monopoly Petr�s Mexicanos's offshore field Cantarell, once the world's second-largest oil field, has plunged to 500,000 barrels a day from its peak of 2.1 million in 2005.
"I don't recall seeing anything in the industry as dramatic as Cantarell," says Mark Thurber, assistant director for research at the Program on Energy and Sustainable Development at Stanford University.
In the very near future unless there is a massive new field finds with easily and cheaply extractable oil, Mexico will be facing the Export Land cash flow crisis scenario. Collapsing production combined with continued domestic consumption growth will lead to Mexico being a net importer far faster than the mere problem of depletion. At that point, what was a source of net foreign currency earnings becomes a loss center instead. The revenue replacement options are either increased taxation, service cuts inclusing security service cuts in the face of a narco-insurgency, or increased foreign borrowing on a market that is still shaky.
I am still surprised that none of the cartels which have indicated a willingness to take on the personnel of the Mexican state through pervasive assaination campaigns have not been willing to take on one of the government's strategic achilles' heels. If any of the cartels has as a goal the diminuation of effective state authority in the smuggling staging zones, attacking the cash flow and carrying capacity of the state would be an extremely effective tactic. Attacking the pipelines would be an escalation, but it offers the chance to hollow out the state through either cash flow deprivation or by forcing Calderon to go hat in hand to the foreign financial markets.
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