page_title: Petroleum industry in Mexico
section_title: 1938 expropriation
hierarchical_section_title: Petroleum industry in Mexico / History / 1938 expropriation
caption_attribution_description: English: General Lázaro Cárdenas del Río
context_page_description: The petroleum industry in Mexico makes Mexico the eleventh largest producer of oil in the world and the thirteenth largest in terms of net exports. Mexico has the seventeenth largest oil reserves in the world, and it is the fourth largest oil producer in the Western Hemisphere behind the United States, Canada and Venezuela. Mexico is not a member of the OPEC or any petroleum production related organizations, but since 1994 it is a member of the North American Free Trade Agreement.
  The petroleum sector is crucial to the Mexican economy; while its oil production has fallen in recent years, oil revenues still generate over 10% of Mexico's export earnings. High taxes on the revenues of Pemex provide about a third of all the tax revenues collected by the Mexican government.
context_section_description: The expropriation of lands by the Mexican government started with the ratification of the Mexican constitution of 1917. By nationalizing the land, Mexico and the people would be better able to control working conditions, pay, and environmental impact. However, this privatization of land further marginalized the indigenous population.
  In 1935, all companies in the business of oil production in Mexico were foreign companies. Labor practices in these companies poorly benefited the workers since the companies were able to block the creation of labor unions through legal and illegal tactics. Despite legal opposition, the Confederation of Mexican Workers was created and proposed a project of general contracts for each oil company. A strike was planned to push towards an agreement but the matter went to the court instead. On December 18, the Arbitration Board declared in favor of the union and ordered the oil companies had to pay 26 million pesos in lost wages because of the strike.
  "Faced with political difficulties in Mexico, as well as the intrusion of saltwater into some of the major producing field, the United States and other foreign oil companies began to seek other sources of supply particularly in Venezuela, and interest in the middle east intensified as well." Foreign oil companies continued to pump as much oil as quickly as possible for exportation, until the Mexican expropriation in 1938, “Ignoring reasonable conservation measures to export as much oil as quickly as possible”. “Mexico only found itself compelled by the rebellious and defiant conduct of the oil companies that is decreed the expropriation of their properties.” The United States refusal to recognize and work with Mexico's post-revolution government, along with a very hazardous work environment that lead to workers strikes and revolts, forced the Mexican government to expropriate the land.
  On March 18, 1938, Mexican President Lázaro Cárdenas announced the nationalization of all oil resources and facilities in Mexico. The government assumed control of all property of nearly every oil company operating in Mexico, including machinery, equipment, buildings, refineries, gas stations, ships and pipelines. At the time, the country's oil industry was dominated by Mexican Eagle Petroleum Company (a subsidiary of Royal Dutch Shell) and American oil firms such as Jersey Standard and Standard Oil of California.
  On June 7, 1938, the state-owned company Petróleos Mexicanos (or "Pemex") was founded, with exclusive rights over exploration, extraction, refining, and commercialization of oil in Mexico.
caption: Lázaro Cárdenas del Río, president of Mexico from 1934 to 1940. In 1938, Cárdenas ordered the expropriation of all oil companies in Mexico.
exif: {"Image Orientation": "Horizontal (normal)", "Image XResolution": "1200", "Image YResolution": "1200", "Image ResolutionUnit": "Pixels/Inch", "Image Software": "Adobe Photoshop CS2 Windows", "Image DateTime": "2010:10:01 20:16:14", "Image ExifOffset": "164", "Thumbnail Compression": "JPEG (old-style)", "Thumbnail XResolution": "72", "Thumbnail YResolution": "72", "Thumbnail ResolutionUnit": "Pixels/Inch", "Thumbnail JPEGInterchangeFormat": "302", "Thumbnail JPEGInterchangeFormatLength": "5027", "EXIF ColorSpace": "Uncalibrated", "EXIF ExifImageWidth": "2566", "EXIF ExifImageLength": "3680"}