MEXICAN OIL BALANCE AND OPPORTUNITIES FOR CONSERVATION

Mexico's abundant oil reserves spurred the development of a highly oil-intensive domestic economy. While oil demand continues to grow despite the recession of the last four years, the recent drop in oil prices -- and therefore in export revenues -- is limiting the country's capacity to invest in new exploration. At the same time, the country's need to generate foreign exchange to pay its debt service may force an escalation in oil exports. A conflict is emerging between Mexico's need to satisfy the domestic demand for oil and its need to export oil to service the debt. In this context, an oil conservation policy appears to be the only viable alternative, although its potential will be limited by lack of capital. The sectoral analysis presented in this report identifies unexplored opportunities for energy conservation and points to the forces that will drive future patterns of demand. 18 refs., 1 fig., 8 tabs.