Mexico's Energy Reform: The Battle Over Oil, Electricity, and the Future
The Pemex Legacy
In 1938, President Lázaro Cárdenas expropriated foreign oil companies and created Petróleos Mexicanos — Pemex — a state-owned monopoly that became the symbol of Mexican sovereignty. For decades, Pemex was the economic engine of the Mexican state. Its revenues funded schools, hospitals, roads, and social programs. The phrase "the oil is ours" remained potent political rhetoric long after the company's best years were behind it.
But Pemex is now one of the world's most indebted oil companies, with liabilities exceeding $100 billion. Its production has fallen from a peak of 3.4 million barrels per day in 2004 to roughly 1.7 million in 2026. Its refineries lose money. Its infrastructure is aging. The Dos Bocas refinery, a flagship project of the previous administration, cost billions over budget and has not delivered the promised energy independence. The structural problem is that Pemex functions as both a company and a government agency, with obligations to workers, communities, and the treasury that conflict with the operational discipline required to compete globally.
The Reform Pendulum
Mexico's energy policy has swung dramatically between administrations. The 2013 reform under President Peña Nieto opened the oil and electricity sectors to private investment for the first time since nationalization, introducing competitive bidding for exploration blocks and allowing private companies to generate and sell electricity. The reform attracted international oil majors and spawned a renewable energy boom, with solar and wind projects multiplying across northern Mexico.
The López Obrador administration reversed course, prioritizing state control through Pemex and the Federal Electricity Commission. Private renewable energy permits were delayed or canceled. The electricity market rules were rewritten to favor state generators. The constitutional changes proposed in 2024 would have entrenched state control further. The current administration, under Claudia Sheinbaum, has signaled a more pragmatic approach — maintaining a strong state role while recognizing that private investment is necessary for Mexico to meet its energy needs and climate commitments.
The Geothermal and Solar Opportunity
Mexico has some of the best renewable energy resources in the world. The Sonoran Desert receives solar radiation comparable to the Sahara. The Isthmus of Tehuantepec has wind speeds that rival the North Sea. Mexico sits on the Pacific Ring of Fire, giving it massive geothermal potential that is almost entirely undeveloped. The country could be a clean energy exporter to the United States and Central America, but realizing that potential requires regulatory certainty, transmission infrastructure, and a political consensus that private capital is a partner, not a threat.
The Edge Review explains politics and energy for general readers. Mexico's energy data is published by the Ministry of Energy and Pemex.