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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