Oil a Game-changer for Mexico?

What does Mexico look like in five years if estimates that Mexico could become a top-five oil nation come true? This is purely speculative as there are all kinds of issues that could and probably will come up but, if it comes to fruition, three things could well change Mexico drastically in the years to come:

  1. Immigration to the US could well plummet as the Mexican economy heats up. The migration pattern when it comes to Mexico is that those from the poorer regions in the south move north looking for work. Finding little, they generally keep going across the border to seek their fortunes in the US. The estimate is that massive exploitation of the shale deposits will have roughly the same impact on Mexico as the deposits in North Dakota had on the US.
  2. Mexico becomes the equal of Brazil as an emerging Latin American market. Not that Mexico is unimportant now, but this vaults the country into the world as a player, geopolitically.
  3. The drug wars will be easier to fight. The power of the drug cartel is the ability to throw local money around and buy off the local officials. There was a time when the political parties had that ability more than the drug gangs did. Oil money is bigger than drug money, and this will give the power back to business and the government, assuming the corruption that has beset Pemex can be controlled.

Does all this change the relationship between the US and Mexico? Almost undoubtedly, it will, but nobody really knows quite how much at this stage.

- Chris Kuehl, PhD, Armada Corporate Intelligence

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