OIL

During the Carranza administration (1917—1920), the oil industry boomed. In 1918, Mexico became the world’s largest oil exporter and its second largest oil producer, behind only the United States. The success of Pearson and Doheny drew in swarms of foreign investors. In 1920, Mexico pumped 25 percent of world production. At their peak, oil taxes accounted for a third of government income.61

Several features of the Mexican oil industry remained constant through the 1920s. Most of the production was exported, mainly to the United States and Britain. In 1926, only 10.5 percent was retained for Mexican use. Ownership of the industry also remained overwhelmingly foreign. As before the Revolution, the oil industry imported almost all the equipment it needed.62

At its peak, the oil industry provided 40,000 jobs to unskilled and semi-skilled Mexican workers, who found better pay than otherwise available. The oil labor force was highly stratified, with the best jobs, housing, and salaries reserved for foreign employees who were not interested in learning Spanish or in sharing their technical know-how with Mexicans.63

During the 1920s, Mexico’s oil boom turned to bust. Annual production fell from 193.4 million barrels in 1921 to 44.7 million in 1929. Previously productive wells filled with salt water as oil was exhausted. In 1927, the average production per well was one-eighth what it had been in 1920. Few new wells were found to replace exhausted ones, despite extensive exploration efforts. Between 1921 and 1929, oil declined from 76 percent of Mexican exports to 15 percent. By 1935 oilfield employment had declined to 15,000. Although the oil companies were often accused of reducing production in response to Mexican nationalism, it was geology, not politics, that caused production to decline.64

After 1921, as production began to decline, foreign oil companies came to be regarded as despoilers of the land rather than as agents of progress. Increasingly, attention focused on polluted streams and large areas of deforested land blanketed in oil. Along the coast, there were oil-fouled oyster beds, shrimping grounds, and mangrove swamps. Roads, telegraph lines, and some 2,589 miles of pipeline, which ruptured with regularity, cut though what had been tropical forest. Rivers were so polluted that they sometimes caught fire.65

As Mexican nationalism increased and production declined, the Mexican vision of the oil industry became increasingly skeptical if not hostile. In 1926, Mugica penned this image of Tampico, the major oil port:

The mushrooming city appears to have sprung from the sea. The sea and oil breathe life into it. It is a city of marshes, which lives like the oyster, clinging to the river and the rich lagoons. Perched high on the sand dunes are elegant homes. The unhealthy lowlands are cluttered with shacks. The river banks rumble with industry. . . There machines pump the country’s wealth, and load it on ships which carry it away. The old city is mutating, with the humble tile-roofed adobe house giving way to reinforced concrete. As in all cities, there are people of every race. But what is modern, healthy, and beautiful belongs to foreigners.66

After 1933, Mexican oil production began to increase again, but it never regained its influence on the world market since both Venezuela and the Middle East would continue to out-produce it. This rebound was driven by an increase in oil prices and the discovery of the large Poza Rica field.67