Who’s really dictating AMLO’s energy policy?

Energy policy in Mexico has been a cornerstone of the political foundations of this country. It is epitomized by the nationalization of PEMEX in 1938.

It was the coup de grace to the heritage of Porfirio Diaz’ dictatorship and its remnants, and along with the Mexican Revolution, allowed the creation of a modern state with independence from foreign agents, at least from the point of view of the powers-to-be.

Since then, the concept of “energy sovereignty” has been the underlying idea behind political autonomy, since it allowed to have a functioning budget despite the political anomalies that trumped healthy economical growth without the vices of an authoritarian regime.

Lopez Obrador was born in 1953, so his political views come from the time he was fighting for political power in the 70s, just when PEMEX grew from a less than average SOE to a big oil company thanks to Cantarell in 1976.

So, conceptually, this period of nationalistic energy policies is behind the current rationale for AMLO’s energy policy. He really thinks that the government should be the one leading economic growth with the direct intervention of industrial and economic leverages; in this case PEMEX and CFE, and the private sector following through.

Along with social policies, a part of his cabinet is trying to reinstate a 70s welfare state, not modelled after Scandinavia, but after a typical populist Latin American regime.

This statement may seem ideologically-charged, but it gets validation after analysis of the people and organizations behind the energy policy. This is the practical side of the question.

There are indeed two sides trying to dictate the energy policy, with one clearly winning the President’s ear.

The two most prominent representatives of this leftist view are Rocio Nahle and the Grupo Ingenieros Pemex Constitución del 17. Without exception, this collective and Nahle worked in the heydays of a strong statist SOE and would like to have that back, without considering that the economic structure of the world has changed. They truly believe is just a matter of political will to turn over the fortunes of PEMEX, as their priority.

In their view, for all purposes, CFE is a secondary actor, but a growing group of politician inside MORENA (the President’s political party) are not that convinced that the company should be the sole participant in the market, and are discreetly voicing concerns of lack of investment and the practical -and political- consequences in 2022, 2023 and 2024.

There are some pivot actors, namely Marcelo Ebrard and Octavio Romero Oropeza. The former may align with the technical side, depending of the political tides; and the latter is just managing the President’s expectations in PEMEX, but has learned the hard way the reality of the company.

So, both conceptually and practically, AMLO’s energy policy is being dictated by stale ideas from a foregone past.