Energy Policies and the Mexican Economy
The report looks at energy policies in Mexico (both a major energy producer, and consumer) within its economic context, how the energy sector is managed, and how it performs, and at the implications for economic growth and public finances, and by e...
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| Format: | ESMAP Paper |
| Language: | English en_US |
| Published: |
Washington, DC
2014
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| Online Access: | http://documents.worldbank.org/curated/en/2004/01/3199517/energy-policies-mexican-economy http://hdl.handle.net/10986/20247 |
| Summary: | The report looks at energy policies in
Mexico (both a major energy producer, and consumer) within
its economic context, how the energy sector is managed, and
how it performs, and at the implications for economic growth
and public finances, and by extension, for broader social
policies which depend heavily on federal funding. The energy
sector finds itself in a vicious circle - reduced budget and
borrowing capacity are leading to insufficient sector
investment - resulting in declines in future production,
hence government revenue. Breaking this vicious circle is a
major challenge, given that attracting finance for energy
sector investment on a major scale, without government
support, lies at the heart of the problem. The report
reviews the choices to increase efficiency, and electricity
subsidies, as well as those for efficiently expanding oil
and gas output. Three key areas for reform are discussed: a)
achieving permanent gains in operational efficiency of the
power and hydrocarbons sectors, to lower costs and improve
service quality; b) restructuring electricity subsidies,
targeting the poorest households; and, c) opening the
hydrocarbons sectors to new players, attracting funds and
skills, needed to undertake exploration, and development of
the country's oil and gas resources. A policy
simulation outlines the potential dynamic, general
equilibrium model, assessing the economic impact of
alternative energy policies. The analysis indicates that
whereby an overoptimistic picture of the economic
performance results from weak employment and wage estimates,
conversely, the importance of increasing oil production will
be undervalued, if the wage constraint is ignored, since
this may be the single most important variable for ensuring
that the real wage constraint does not bite. |
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