Mexico remains one of Latin America's largest oil producers and has been among the world's most important oil-producing countries for decades. Oil has historically been considered the bedrock of government finances, with hydrocarbon revenues forming a significant portion of the federal budget for years, funding social programs and propping up the peso. But at the same time, the state paradoxically depends on the import of gasoline, primarily from the United States. Just a few years ago, Mexico imported about 75% of its gasoline, but today — about half of consumption.
At first glance this seems illogical. If a country produces millions of barrels of oil, why doesn't it have the right to provide itself with fuel? The answer lies on several levels at once: in the properties of the oil itself, in the state of oil refining, in the economics of the industry and in the government policy of recent decades.
The main problem is that oil and gasoline — it's not the same thing. Producing oil is not enough. It still needs to be processed into gasoline, diesel and other products. And this is where Mexico has historically had difficulties.
A significant portion of Mexican oil— This is heavy and high-sulfur Maya oil. Such oil is much more difficult and expensive to process than light grades. It contains a lot of sulfur and heavy fractions, including asphaltenes — dense molecules that can clog equipment and pipelines. To effectively process such raw materials, modern and very expensive oil refining capacities are needed.
The problem is that most of Mexico's refineries were built in the mid-20th century. Many installations were designed more than 50 years ago and were technologically inferior to American plants even at the time of launch. For decades, state-owned Petróleos Mexicanos (Pemex) has chronically underinvested in refining upgrades.
The reason was the economic logic of the time. The government proceeded from the fact that it was more profitable to export crude oil and buy gasoline abroad. Especially considering the proximity of the United States, where oil refineries on the Gulf Coast were specially adapted to heavy and sulfur oil from Mexico and Venezuela. American refineries processed Mexican oil more efficiently and cheaper than Mexico itself.
As a result, a peculiar dependence was formed: Mexico exported oil to the United States and at the same time imported gasoline from there. From an economic point of view, such a model has long been considered rational. Oil refining — an extremely capital-intensive business with low profitability and high technology criteria. In many cases, it is cheaper to buy ready-made gasoline than to build your own complex infrastructure.
The situation began to change after former President Andrés Manuel López Obrador (AMLO) came to power. His administration has focused on energy sovereignty and reducing dependence on fuel imports. Authorities were especially impressed by the energy crisis in Texas in the winter of 2021, when frost paralyzed gas supplies and showed how dependent Mexico is on American infrastructure.
It was then that a large-scale program to restore oil refining began. Pemex upgraded six existing refineries, acquired full control of the Texas Deer Park refinery for US$600 million and built a giant new Olmeca refinery complex at Dos Bocas on the Gulf Coast for US$21 billion.
But even multi-billion dollar investments did not solve the problem instantly.
First, refining heavy oil remains expensive and technically challenging. Secondly, the new Dos Bocas refinery was operating far from full capacity for a long time. Thirdly, Pemex itself is experiencing a difficult financial situation: high debt, falling production, efficiency problems and losses in the oil refining segment.
Critics of the current strategy believe that Mexico is trying to engage in a business that is objectively less effective domestically than abroad. Economists point out that refining oil in Mexico is significantly more expensive than importing finished gasoline. From their point of view, the state is actually subsidizing the political idea of energy independence.
Proponents of the policy of self-sufficiency think differently. For them, the issue of fuel — This is not only the economy, but also national security. In a world where wars, sanctions, trade conflicts and blockages of shipping routes can instantly inflate oil and gasoline prices, dependence on imports is perceived as a strategic risk.
This became especially noticeable against the backdrop of the war with Iran and the threat of supply disruptions through the Strait of Hormuz, one of the key routes for global oil trade. For Mexico, where the cost of gasoline directly affects inflation, transportation, food and social stability, the issue of domestic fuel production has become politically sensitive.
Today the country is in a transitional phase. If in 2018 domestic production covered approximately 20% of gasoline demand, now — almost half already. This is notable progress, but there is still a long way to go to complete independence. In Pemex's work plan presented by President Claudia Sheinbaum, the state oil company reaffirmed its commitment to energy security.
The paradox of Mexico is that the presence of oil does not in itself guarantee fuel independence. In the oil industry, it is not only the volume of production that matters, but also the ability to efficiently process raw materials. And this is a question of technology, infrastructure, investment and long-term industrial policy.