Megan McDermott

ANTH 360

2 October 2014

PEMEX Pride: The Symbiotic Relationship Between Oil and Identity in

Mexico

“Tierra y libertad!” as coined by Emiliano Zapata, was a

phrase that resonated throughout the Mexican Revolution from 1910-

1920. By the end of the war, not only did Mexicans retake their

land and freedom from Diaz’s authoritarian rule, they also

established what could be considered the country’s first true

collective national identity. This identity created a newfound

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sense of empowerment for the Latin American giant: no longer

constrained by the chains of internal oppression, Mexico was ready

to continue the fight for independence on a global front. Rich in

natural resources, nationalization of industry – specifically

hydrocarbons – was the best way to decrease foreign influence and

kick start industrialization. Despite state ownership of all

subsoil as outlined in Article 27 of the Mexican Constitution of

1917, it was not until 1938 that President Cardenas declared the

official expropriation of Mexico’s oil industry (Moreno, 40). The

bold decision to nationalize the oil industry, in conjunction with

standing up to global imperial forces (read: The United States),

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supplemented by fresh revolutionary rhetoric, turned oil into

Mexico’s fundamental symbol of independence. This tangible,

symbolic representation of society’s hard-fought freedom influenced

the development of a stronger national culture and identity.

However, once a force for progress, the ideals and struggle that

oil represented in the early 20th century are so deeply ingrained

in the Mexican psyche that they have become the antithesis of their

original intentions for Mexican progress and development.

Despite the potency of nationalist sentiment immediately

following the revolution in 1920, it took 18 years for Mexico to

nationalize their oil industry. Although Mexico emerged as a much

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more unified nation after the war, ten years of internal conflict,

preceded by an oppressive dictatorial regime, left the country

vulnerable to foreign economic interests. Strife notwithstanding,

1921 – just one year after the end of the Mexican Revolution –

Mexico’s oil industry witnessed its most productive year in

history. In the year immediately following, however, productivity

began declining (Grayson, 13). Over the next ten years, the Mexican

oil industry’s productivity reflected a steady downward trend. This

occurred in direct correlation with the availability of much

cheaper oil fields in Venezuela. Consequently, much of the Mexican

oil industry’s domestic labor force was dismantled, and those who

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remained had lost both their collective bargaining power and

economic leverage. The rough patch was relatively short-lived, and

the industry took an optimistic turn in the 1930s with the

discovery of huge new reserves between Tampico and Veracruz

(“Country Studies”). Production picked up once again, but

legislative barriers to entry as a result of the Constitution of

1917 discouraged the amount of investment needed to promote

significant economic growth. While working conditions improved due

to the new constitution, the stark differences between local

workers’ physical demands and compensation and that of their

foreign counterparts, were impossible to ignore (Grayson, 14).

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The recent discoveries hinting at Mexico’s vast resource

potential, combined with the all too fresh nationalist movement,

continued exploitation of labor by foreign interests, and favorable

new legislation, opened a giant window of opportunity for the

struggling nation. In 1934, Lazaro Cardenas was elected President,

and for the next four years he worked to seize this window for his

country. He focused on promoting widespread social reform, with a

special emphasis on concentrating and empowering Mexico’s working

class (“Country Studies”). In 1938 Mexico’s tumultuous history

worked in their favor. The Supreme Court ruled in favor of the full

list of demands put forth by Mexico’s petroleum workers, which

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included increased monetary compensation and limits on the number

of “confidential employees” (i.e. employees at management’s beck

and call) (Grayson, 15). Foreign interests, doubtful of the

President’s commitment to enforce legislation, let alone the

court’s ruling, refused full cooperation. This doubt was seen to

many as “the decisive factor in galvanizing national pride” (15).

As a result, on March 18, 1938 – a day so important as to warrant a

national holiday – Cardenas formally declared the expropriation of

17 foreign oil companies (mostly American and British) (15). It was

at this point in time that Mexico truly proved not just to the

world, but more importantly to itself, that it had become a

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legitimate, unified force. Oil, then, cemented the Mexican national

identity.

By 1940, 90 percent of the Mexico’s oil industry resided under

control of the newly formed PEMEX (Grayson, 16). Shortly

thereafter, WWII began, providing an immediate boost to the Mexican

oil industry, and by association, a boost to Mexican nationalism.

The prevailing strength of the Mexican economy in the 1940s, due in

large part to the recently nationalized oil industry, inextricably

linked Mexico’s collective social identity to PEMEX. Beyond a

national identity, oil embedded itself in the identity of

individual citizens, as well. It represented independence,

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progress, wealth, and upward mobility. Mexicans eagerly adopted the

ideals of a consumer democracy (Moreno, 9). As far as the general

population was concerned, they didn’t need help from Americans to

achieve the “American dream”.

The increasing trend in productivity didn’t stop after WWII,

but continued for almost 30 years with an average annual growth

rate of 6 percent between 1938 and 1971 (“Country Studies”). In

1957, however, domestic demand exceeded output and the government

was forced to import oil for the first time since the formation of

PEMEX. Despite discovering new reserves in Tehuantepec and Reynosa

during the early 70s, and the Arab oil embargo in 1973, Mexico’s

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supply/demand gap continued to widen (Grayson, 151). Then, in the

1980s, Mexico was unable to hold off the Dutch Disease any longer.

Because of its reliance on oil, the country had poured all of its

investments into continuing development of oil reserves, and had

consequently begun importing a substantial portion of intermediate

goods, funded through external borrowing. These actions created a

huge account deficit, and by 1982, “the government devalued the

peso by 70 percent” (Everhart, 5). Pride by way of good fortune,

and the continued entrenchment of oil into the Mexican soul,

blinded the Mexican population to potential problems with their

increasing dependence on not just a commodity, but on a non-

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renewable commodity with a pre-established track record of economic

volatility and of which the available supply was not certain.

After the debt crisis in the 1980s, Mexico made a significant

effort to diversify exports. Serious structural changes, however, were

limited. Instead, by 1993, President Salinas sought to reduce

corruption and rampant inefficiencies with PEMEX, which resulted in

“massive employee layoffs by…some 44 percent of the total payroll”

(“Country Studies”). In an effort to enact structural reform that was

so desperately needed, without creating significant public upheaval,

the government agreed to “allow private investment in the storage,

transportation, and distribution of natural gas” (“Country Studies”).

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To the eye of the Mexican beholder, the power of PEMEX’s oil was still

under their control.

Today, with a current population of around 125 Million, PEMEX

employs around 1% of the country’s total population. This

proportion notwithstanding, PEMEX is still responsible for

approximately one-third of the Mexican government’s annual revenue.

Despite the longstanding, unhealthy reliance on oil revenues, a

poverty rate of nearly 50 percent, and PEMEX’s structural inability

to invest in adequate continuing development of the industry, the

public continues to push back against oil reform (Ball). From a

logical standpoint, the resistance makes no sense. President Nieto

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has worked diligently to create new policies that empower PEMEX,

while accounting for the nationally owned conglomerate’s glaring

shortcomings (Ball).

Ultimately, in order for Mexico to advance economically and

socially, there must be a significant cultural shift surrounding

the country’s psychological and economic dependence on oil. While

the idea of oil as a symbol of Mexico’s struggle for unity and

independence is understandable, the Mexican attachment to oil as a

symbol has only grown stronger with time as society grasps for some

sort of unifying element amidst an era of both economic and

political uncertainty. However, society must understand that by

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opposing reform, they are slowly suffocating themselves. The pro-

reform government must emphasize the incorporation of humility

within the folds of national identity as an element of self-

preservation, and ultimately, self-improvement. The logical

arguments have been made. Now, Nieto must make an emotional claim

to his constituents: PEMEX is a member of the Mexican familia, and

ignoring its desperation will only cause more pain for more people

in the future.

Works Cited

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Ball, Jeffry. "The drama of Mexico's Black Gold - Fortune." 2014.

22 Aug. 2014 <http://fortune.com/2014/08/14/pemex-oil-black-gold/>

Everhart, S. "Management of Oil." 2001. <http://www-

wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2001/05/11/00009

4946_01042806383527/Rendered/PDF/multi0page.pdf>

Grayson, George. The politics of Mexican oil. University of Pittsburgh Pre,

1981.

"Mexico - Oil - Country Studies." 2003. 2 Oct. 2014

<http://countrystudies.us/mexico/78.htm>

Moreno, Julio. Yankee don't go home!: Mexican nationalism, American business

culture, and the shaping of modern Mexico, 1920-1950. UNC Press Books, 2003.

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