Battle brews over future of Mexican oil

by Chris Hawley - Apr. 8, 2008 12:00 AM

Republic Mexico City Bureau

MEXICO CITY - The cartoon in a recent newspaper said it all: A sinking ship labeled "Mexico" hangs underwater, tied to a floating oil barrel, as a hand holding scissors prepares to cut the cord.

Mexico is in an uproar over President Felipe Calderón's effort to reform the state oil monopoly, whose sales have long kept the government budget afloat as well as supplying a big chunk of the United States' energy needs.

Protesters are threatening to seize oil refineries, block highways and shut down airports. The Popular Revolutionary Army, a guerrilla group known for bomb attacks, has vowed to cripple the company if the government opens it to foreign investment. About 28,000 activists have joined "brigades" to carry out civil disobedience.

Any disruption of oil exports could be a big blow to Americans already reeling from high fuel prices. Mexico is the United States' third-biggest supplier of oil after Canada and Saudi Arabia.

The opposition is also the most serious challenge yet to Calderón, who had been on a roll since taking office in December 2006. He has coaxed opposition lawmakers into supporting overhauls of Mexico's tax code, legal system and government retirement plan. But energy reform is an even bigger powder keg.