The Rice University’s Baker Institute for Public Policy published its 2023 outlook on Mexico and revealed that the country’s energy self-sufficiency has decreased in recent years despite the government’s efforts to boost independence.
According to the study, President López Obrador’s social projects and depressed prospects for economic growth put pressure on the federal budget, as the government scrambles for funding for its public infrastructure projects such as Dos Bocas’ Olmeca Refinery and the AIFA airport. The Baker Institute also underlined federal tactics to collect taxes: “MORENA’s lawmakers constantly present initiatives to collect more money for the administration. For instance, in 2020, they passed legislation to seize about US$3.2 billion from 109 public trusts. These trusts had been used to finance medical research, disaster response efforts, film production, the protection of journalists, and more. The administration diverted the money to fund its priorities,” read the report.
The institute forecasts that during 2023, federal efforts to continue shielding PEMEX and CFE will continue as the government works to achieve its long-promised energy self-sufficiency. Furthermore, despite US pressure to abide by the USMCA, the institute does not project that this dispute could escalate so easily towards imposing customs tariffs. “The continued conversation especially applies to the countries’ economic ties, the brightest spot of the relationship. Cooperation will likely continue on its current path, though hampered by ongoing disputes about energy sector policies, which particularly interest López Obrador.”
Notwithstanding the efforts to bolster state companies, energy self-sufficiency has weakened over the current administration. While López Obrador will continue its protectionist discourse, regarding the value of hydrocarbon trade flows, the energy trade deficit grew from US$21.4 billion in 2019 to US$24.6 billion in 2021. By the first eight months of 2022, the negative trade balance amounted to US$24.5 billion. “Even if the government boosts investment, PEMEX refineries will continue to register relatively low levels of production... Mostly because the construction of the Olmeca refinery at Dos Bocas and the two coking units at the refineries of Tula and Salina Cruz are not expected to be completed in the short term. Imports will keep filling the gap.”