There is a topic of great importance that raises many issues but is not widely discussed. In the next 2 years, the implications of national sovereignty, foreign policy, bilateral trade, gas prices and Big Oil’s investments of profit, U.S. domestic drilling and energy independence, even immigration and the environment will need to be addressed because of something called a transboundary reservioir.
In 1976, a dispute arose between the United States and Mexico when their jurisdictions overlapped in the Gulf of Mexico. In the ensuing diplomatic exchange, maritime boundaries were drawn up and agreed upon. In 1979, Mexico ratified the treaty. In 1997 the United States Senate finally did so and it was subsequently executed in 2000.
There are a few interesting notes about this treaty:
• Mexico and the United States share a vast marine area in which lies a transboundary reservoir.
• The bilateral treaty, which delimitates the transboundary reservoir, establishes a 10-year moratorium during which neither country may "permit oil or natural gas drilling or exploitation of the continental shelf within one and four-tenths (1.4) nautical miles of the boundary." This moratorium will end in 2010.
• The treaty was enacted with minimal rules set for exploration of these shared oil and gas fields, which must soon be negotiated between the two nations in order to fully implement the rules of the treaty.
• Oil sharing and unitization schemes need to be reached by the parties in accordance of international practice.
• Mexico’s constitutional and legal framework is a major challenge in implementing international practice relating to this treaty.
In 1983, it was none other than Ronald Reagan who with the stroke of the pen effectively increased the United States by some 4 million square miles, joining Thomas Jefferson and William Seward as Americans who greatly expanded the nation’s sovereignty through peaceful means. The creation of the Exclusive Economic Zone (EEZ) effectively gives all nations formal control to manage resources up to 200 nautical miles out from their coastlines.
Regarding the U.S.-Mexico treaty, the transboundary reservoir essentially has been surveyed and no significant hydrocarbon deposits were found. There are, however, deposits to be found in other border areas of Mexico’s EEZ. Mexico may soon use the United Nations Convention on the Law of the Sea, 1982 (UNCLOS) to claim title over the oil resources in these border areas. In any case, when the moratorium expires in 2010 U.S. oil companies will want an accord with Mexico as the treaty requires or would probably go to courts.
It’s been said that Mexico declined OPEC membership due to the persistence of U.S. opposition. When NAFTA was passed, many in Mexico assumed that would eventually lead to an immigration accord, yet President Carlos Salinas stated that was not possible because the United States demanded preferential treatment of oil in exchange.
Hearsay aside, Republicans showed their true intentions in 2003. House members led by now-retired Congressman Cass Ballenger approved an amendment in a State Department funding bill stating that any accord on immigration issues with Mexico should include an agreement to allow U.S. companies to invest in the state oil company Pemex. Mexicans were outraged with this and many saw this proposal along with the invasion of Iraq two months earlier as proof that U.S. foreign policy was being led by a desire for oil. Pemex has been a source of pride in Mexico since the state gained control in 1938. More practically, the Mexican Constitution forbids foreign investment in or profiting from the nation’s oil.
Fast forward to 2008. Pemex’s infrastructure continues to age and deteriorate since Mexico neglected modernization while using Pemex as a cash cow for decades. After Saudi Arabia and Canada, Mexico is the United State’s 3rd largest supplier in oil but lately there’s been a problem. Peak oil savants point to Mexico’s Cantarell field as proof of worldwide decline in oil production. Mexican crude oil output in April 2008 dropped 13% from the previous year to 2.767 million barrels per day in large part because of the decreasing Cantarell supply. Thus, the once unthinkable policy of opening Pemex to outside investment is becoming an issue as Mexican President Felipe Calderón faces considerable resistance. Leftist lawmakers in Congress recently barricaded themselves for two weeks in opposition to the proposal of "the privatization of Pemex."
Recently, Mexican Energy Secretary Georgina Kessel grimly warned the Mexican Congress: If legislators did not approve reforms within the oil sector, the country would suffer a "severe energy crisis" within a decade. In the next two years, if energy reform in Mexico is not enacted the issue will come up again since an already-ratified treaty with the U.S. would be at odds with the Mexican Constitution.
Any chance to invest in an updated infrastructure or pursue deep-drilling opportunities and increase capacity would benefit everyone. With more lax environmental laws and the supremacy of Pemex, construction and modernization could occur quicker and more efficiently in Mexico than the United States as a short-term strengthening of production.
It’s understandable that U.S. oil companies want to increase their production potential in the hemisphere but the problem is that immigration is a bargaining chip. Republicans have essentially been trying to blackmail Mexico to capitulate since 1994 and were successful in derailing an immigration proposal by Democrats. It may be a coincidence, but perhaps Oil Men persuaded John McCain to scrap his immigration plan, leading him to declare he would now vote against his own bill. As an added bonus, Republican states can continue to push proof of citizenship voting laws through under the pretext that they are protecting the public from "illegal alien voting."
What can Democrats offer in the short-term and in policymaking? The Republican tactics of intimidation led by greed have done little to sway Mexico’s fear of U.S. imperial ambitions vis-à-vis oil investment. Oil Men and their lobbyist-controlled House cohorts want to look out for the U.S. players to ensure if/when we go in, they get more than their fair share.
Could Barack Obama assuage Mexican fears that investment would be done fairly in order to persuade them to enact much needed reform and amend the Constitution? An American presidential hopeful may be met with reservation, but he would be seen as more truthful and less of an imperialist than the current administration.
Could Democrats tighten up a policy with Mexico that ultimately results in lower oil prices and increased oil and gasoline production? If Democrats are already proposing immigration reform with no oil strings attached, perhaps increased trust can lead to negotiation for foreign investment on fairer terms. U.S. oil companies can truly use their windfall profits in a constructive manner and Democrats could do more for U.S. oil interests in the stroke of a pen than the entire Bush presidency could manage.
This also points out the hypocrisy of oil-influenced Republicans who may support immigration reform but only after telling Mexico that first we need the petróleo, por favor.