By Francisco Peyret
President Andrés Manuel López Obrador, after celebrating March 18’s 75th anniversary of the expropriation of oil in Mexico, was highly criticized by the opposition for his energy policy; however, it seems that global trends are proving him right. López Obrador mainly talks about energy sovereignty. He has invested many economic and political resources, in his words, to rescue the Federal Electricity Commission, Petróleos Mexicanos, and to nationalize Mexico’s lithium reserves.
According to Statistics, «The oil industry is one of the most powerful in the world economy. Every year more than 4,000 million tons of this black gold are produced, a third of which comes from the United States, Saudi Arabia, and Russia (despite the war and the sanctions imposed by NATO).» The amount of oil sales grew 63.5% annually, mainly because of the increase in the price of oil worldwide due to the war between Russia and Ukraine.
According to data presented by the researcher Ignacio Faragiza, the large producers cash in on the economic turmoil. The five biggest Western oil companies—U.S. Exxon Mobil and Chevron, Anglo-Dutch Shell, Britain’s BP, and France’s TotalEnergies—posted a combined net profit of more than US$196 billion in 2022. That’s twice as much as in 2021, when the prices had already begun to spike and also 50% more than what was earned in the final stretch of the super cycle for raw materials, from when the previous record dated. The year of the war and the energy crisis was also the best in its history.
It seems that the oil business is still huge. No wonder 80 refineries are currently being built around the world. The United States has about 129 to give us an idea of the size of these investments. Unfortunately, we all know that the oil industry at a global level must be one of the most harmful to the environment, but at this moment the production of energy through renewable energies only represents 20% of the total worldwide. Germany opted for clean energy. Let’s remember that they closed all their nuclear plants to produce energy; this country took risks for clean energy and Russian gas. At the moment, they are activating their coal plants, thus appearing as one of the big losers in the face of the Russia versus Ukraine conflict.
Everything indicates that the expiration date of oil is still far from arriving—it is estimated that it will take from 35 to 50 years.
Last week President Biden announced oil exploration in Alaska. To this we must add that we have petroleum derivatives everywhere—fuels, plastics, asphalt, fertilizers, cosmetics, perfumes, food supplements, synthetic fabrics, and drugs, among others. Given the technological reality and world economic trends, the discourse on combating climate change and green policies seems like a bad joke. The size of the oil industry truly exceeds our imagination; the global consumption of goods stinks of oil.
The double talk is that on the one hand everyone talks about caring for the environment and the use of renewable energies, and, on the other, as countries, we are honestly not doing anything to change our ways of producing and consuming. When they tell me that in the Nordic countries all the inhabitants use electric cars, it seems to me a ridiculous achievement, given that the energy and all the components of these cars are derived from petroleum. Human beings have to understand that natural resources are limited. Even now we are seeing that even banks have their limits. The path of excessive consumption is not leading us anywhere.
President Andrés López Obrador is bringing us back to the game of the oil industry, which is definitely profitable but is a very dangerous bet in many ways. We already gave up this industry as our main economic engine on one occasion, but we did not change it for anything because we began to obtain our main income from remittances from our migrants. With the current economic situation, geopolitical rearranging, and the nearshoring of the global industry, once again we have the opportunity to diversify our economy towards something healthier and with a better future.
