The Environmental Consequences of Privatizing Mexico’s Oil

On August 16, an eight-inch pipeline ruptured at Mexico’s oldest refinery in Minatitlán in the south of Veracruz state. Even as oily wastes poured into the Coatzacoalcos River, stretching out twenty miles by the day’s end, a group of long-time residents meeting in this same city recalled the long, damaging toll that the petrochemical industry has inflicted on the environment and people of this region. But their harrowing past and present have barely registered in the many headlines that Mexican oil was making in this nation’s capital, as well as leading American newspapers. There, for the past few weeks, talk has swirled around the new Mexican president’s proposal to (more or less) privatize the country’s oil industry, for well over half a century run by the Mexican state.

This debate over President Enrique Peña Nieto’s plan needs to start considering what any reform may mean for the environment and well being of those in places like Minatitlán. There’s no better starting point for this reflection than the expropriation of 1938, when Mexico became the first developing nation to expel Western-owned oil companies and convert its holdings into a government enterprise. Many Mexicans celebrate this birth of Petróleos Mexicanos, or Pemex, in nearly the same terms as that country’s revolution of the 1910s; it is a modern Declaration of Independence from foreign powers. Hence, leftists like former presidential candidate Andres Manuel López Obrador have charged that the reform amounts to “treason,” while Peña Nieto defends his plan as actually fulfilling the intentions of Lázaro Cárdenas, the president who signed off on the state takeover. Nearly forgotten, both in Mexico and in the United States, is that Cárdenas’s decision to expropriate was sparked by local uprisings in oil refineries and fields that were deeply tied to the labor and environmental abuses of foreign companies.

Excursions into Mexican archives predating 1938 by the historian Myrna Santiago as well as myself have demonstrated just how extensive these abuses were. For local oil workers, strikes and sabotage became a way of life. Beyond the refineries and oil fields of Veracruz and Tamaulipas themselves, massive oil spills regularly threatened the livelihood of fishermen and farmers. And the horrific fires and explosions, the smoke and fumes that billowed from inside oil operations, impinged on the surrounding towns, stoking an anger and resistance that by 1938 made expropriation seem the best solution.

Today’s American readers will find the arguments favoring Peña Nieto’s energy reform familiar. They center around the flaws of the state-run enterprise: its corruption and inefficiency, its coddling of unions, and its monopoly in the national market for consumer goods such as gasoline, which has kept prices high. But thus far, the debates have hardly touched upon the local consequences of this reform for regions that will be most affected, like the towns around the mouth of the Coatzacoalcos River, where 70 percent of Mexico’s petrochemical production has gravitated.

Already a few weeks ago, the sale of a huge petrochemical complex at Pajaritos to a private firm has led to widespread rumors about impending layoffs, and lit a fire under the feet of the region’s labor leaders. As for the environmental impacts in store from any reform, these will only add to those accrued under Pemex itself.

The damaging hand of state-run oil and petrochemical production on this region was made abundantly clear on August 16, at a gathering I conducted at the Universidad Veracruzana in Minatitlán. There, a representative array of citizens and Pemex spokespeople shared recollections of just how deeply this industry had affected their region. Though Pemex representatives argued that its attention to the environment had much improved starting in the early 1990s, they made little effort to deny the flood of critical testimony that followed. Fisherman and biologists reported plummeting populations of fish all along the river, especially near the plants. Those living in neighborhoods near the refinery talked of regular visitations by fumes, smoke, and strange smells. Both they and doctors spoke of unusual concentrations of childhood leukemia and other deadly ailments around plants and in the region as a whole. Nevertheless, a dearth of statistics or other studies – even more sparse than in Louisiana’s “Cancer Alley” – has kept most of these claims in the realm of the “merely” anecdotal.

Though Pemex itself supplies between 30 and 40 percent of the federal government’s budget, state monitoring of its environmental impacts in this area remains feeble. At the local office of SEMARNAT, Mexico’s counterpart to the Environmental Protection Agency, there remains as yet only a single person charged with overseeing the region’s industry. A general consensus emerging from this meeting was that however good Pemex’s and Mexico’s environmental policies may appear on paper, they are not being effectively applied (“no se cumplen”).

Even if the monitoring and hands-on regulation were suddenly stepped up, recent experiences in the United States make it all too easy to imagine what further calamities will be inflicted upon this and other resource-rich regions of Mexico once anything like Peña Nieto’s reform goes through, and private multinationals rush in. One stated intention of the reform is to invite new investments in technologies that can open up the nation’s deep-water oil reserves – the kind of drilling done by Deepwater Horizon with such disastrous results along our own Gulf coast. Another hoped-for import is fracking, whose track record in the United States has been, to say the least, controversial.

The looming prospect of further environmental disasters means that at the very least, stepped-up environmental monitoring and control should form an integral part of any reform of Mexico’s oil industry. At best – though this possibility seems more remote – the reform should include policies as well as a clear timetable to transition Mexico away from fossil fuels toward more renewable energy sources.

The good news is that many in southern Veracruz, at least, already know the drawbacks of having an oil industry next door, and that some of them have been organizing. But thus far, aside from Greenpeace Mexico and a 2007 visit from Global Community Monitor, they have received little support either from national or international environmental groups. Those Americans who have become so concerned about fracking or oil drilling or climate change need to lift their eyes beyond the confines of their own local and national debates. In this historic, far-reaching contest over the future of Mexican oil and gas, all these same threats are in play, boding a new depth of devastation to the humanity and ecology of this far corner of the earth.

Dissent is a quarterly, left-liberal magazine of politics and culture.