New Cartel Threat: U.S. Energy Supply
Posted 09/08/2010 07:03 PM ET
Energy: Mexico's state oil firm, our second-largest foreign supplier, is under attack from drug cartels. But that's not stopping the U.S. from investing more in its operations while American rigs lie idle in the Gulf.
The volatile Middle East is often seen as the nexus of risk to U.S. energy supplies. But the biggest threat may be next door, in Mexico. It's bad enough that oil production there is declining due to underinvestment. But now the state oil monopoly, Pemex, is encountering a threat no one foresaw a few years ago: attacks from the country's notorious criminal cartels.
The Los Angeles Times this week reported that the violent "Los Zetas" cartel has "crippled" production in the Burgos basin in Tamaulipas state, home of Mexico's biggest natural gas fields.
Thirty oil workers and contractors have been kidnapped, including five who were snatched in May and haven't been heard from since. The cartels force workers to collaborate with them to steal energy, which is then sold for cash.
The gunmen also shake information out of workers on security systems and the delicate workings of gas transport so they can hijack production. Natural gas, with its visible pipelines, is particularly vulnerable, but the cartels have begun moving on oil too.
Pemex won't send its inspectors to some of the areas where the cartels have gotten a foothold, and the Times reported the company doesn't want to talk about it.
These acts, from the same people who smuggle drugs and illegal immigrants into the U.S., amount to an attack on the Mexican state. One-third of the national budget comes from energy earnings. A cartel controlling Mexico's substitute for tax revenue effectively can take over the government.
"How is it that Pemex, supposedly the backbone of the nation, can be made to bow down like this?" a relative of a kidnapped oil worker asked the Times.
But this creeping takeover also threatens the U.S. America is committed to Mexican oil, given that it isn't permitted to produce sufficient quantities of energy at home, even with vast resources. About 1.2 million barrels of Mexican crude come to the U.S. each day along with significant gas supplies.
The U.S. has been pitifully dependent on Mexico for its energy supplies for some time, and energy analysts worry about the state of underinvestment in Mexico's state fields. An explosion Tuesday at the country's third-largest refinery did nothing to allay those concerns.
High debt and aging fields are other problems with the nation the U.S. depends on in lieu of its own development.
Conditions are now especially dicey given the Obama administration's May 27 moratorium on offshore drilling. That arbitrary ban, placed by presidential decree in the wake of the BP oil spill, shut down deep-water drilling for U.S. companies that had been operating safely. Rigs affected are either lying idle or beginning to move abroad, leaving the U.S. to buy more oil from foreign suppliers.
That would explain why the U.S. Export-Import Bank has begun shoveling money into Mexican production. On Wednesday, Cybercast News Service reported that the independent government entity loaned $1.05 billion in 2009 to Pemex for four projects that would undoubtedly result in more development. Another billion is slated for loans this year, pending Congress' approval.
The bank itself is quick to say that the cash would go to contracts for American companies, but so what? The fact is, U.S. firms will be working to develop oil and gas fields in a country that has lost control of its security.
Al-Qaida-menaced Saudi Arabia has managed to effectively deal with criminal threats to its oil, but Mexico has not. Developing its resources instead of our own will only create an attractive target for cartels such as Los Zetas.
Making matters worse, Congress is treating U.S. security aid to Mexico, known as the Merida Initiative, as a political football, teasingly offering up cash and then pulling some of it back over alleged human rights violations. That occurred last week, when $26 million in security assistance was yanked from Mexico's $400 million aid package.
It all amounts to a big problem that's getting bigger, but which is being ignored as Washington makes one bad decision after another.
The best solution for the U.S. is to lift the federal deep-water drilling moratorium and find ways to encourage production of viable, proven domestic sources of energy such as oil, gas, coal, shale and nuclear power that in the end will lessen our dependence on nations under attack by criminal cartels.
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