<DrumBeat: September 10, 2007 The Oil Drum When Is "Global Peak Energy?" According to Publicly Available Data, Probably Sooner Than You Think>

262 comments on Mexico: A Nation-State Dissolves?

Comments can no longer be added to this story.

| Show without comments | PDF version

halcyon on July 12, 2007 - 4:30pm Permalink | Subthread | Parent | Comments top

Interesting.

Let's see Mexico's GNP development (from gapminder.org):

Compare it to US oil dollar price (inflation adjusted):

What about Mexico's oil exports (in volume, not in price)?

As long as oil exports from Mexico have remained relatively steady, their GNP average has adjusted roughly as a function of oil price.

As as side note, the income distribution has clearly narrowed as you can see from the income distribution chart:

What happens, when their oil exports start to go down AND oil price keeps going up?

For how long (and by how much) can the rising oil price lessen the effect of diminishing export volumes?

How much of an impact (how fast) does that have on the economy at whole?

Currently oil exports are roughly 11% of Mexico's exports. Exports are 32% of total GDP (source: Economist, 2006).

At what point do they have to cut into to domestic consumption of oil and risk losing economic growth in other sectors?

After facing the reality of ELM, aren't these some of the next question they are asking themselves?

BTW, Mexico has been for some time already trying to encourage growth in exports that are non-oil related. Considering oil was over 70% of their exports at the beginning of 80's, I think they have made nice progress in lessening the impact of oil exports on their economy.

Comments can no longer be added to this story.
memmel on July 12, 2007 - 4:52pm Permalink | Subthread | Parent | Comments top

How do you handle the tight coupling with the US ?
Most of the growth can be attributed to moving manufacturing from the US to Mexico. It interesting that even as this happened income became increasingly concentrated. I'm not sure you can easily consider the Mexican economy decoupled from the US. Now assuming a tight coupling and also expecting the US to enter at least a mild recession soon one would expect this coupling to not help.

So even though it exists and is a big complication for considering Mexico as and independent Oil Exporter we expect it to turn down at the same time so maybe it can be dismissed since at best it will be and additional negative factor.

Canada is in the same economic boat in a lot of ways as Mexico so I don't see this tight economic coupling as a positive as the US economy itself stumbles.

As long as the US economy was booming however it did hide or delay the effects of ELM. In any case ELM is not exactly correct for tightly coupled economies but unless you can show the other economy will remain robust it seems to me that at best it delays ELM's economic effects.

Comments can no longer be added to this story.
memmel on July 12, 2007 - 4:59pm Permalink | Subthread | Parent | Comments top

I just realized that the obvious pumping of the housing bubble by the US well beyond reason is probably the only thing that kept the effects of ELM on Mexico from becoming obvious. So I wonder how much keeping Mexico afloat played into supporting the housing bubble? Mexico was a huge beneficiary of the bubble probably the largest. If you look at the numbers the US housing bubble is responsible for keeping the Mexican economy going over the last few years.

Interesting.

Comments can no longer be added to this story.

262 comments on Mexico: A Nation-State Dissolves?

Comments can no longer be added to this story.

| Show without comments | PDF version