Oily Dynamite

When nationalistic, left-wing President Lazaro Cardenas expropriated the great foreign oil companies, Mexicans went on a patriotic spree. Exultant workers hailed the end of "foreign exploitation" as they paraded through city streets and village plazas; bands blared; housewives offered their silver to help pay for the $400,000,000 seizure. That was eight years ago. Last week TIME learned that President-elect Miguel Aleman might let foreign oil interests return.

The Mexican Government's attempt to run the oil industry has been a dismal flop. Pemex (Petroleos Mexicanos), the operating company, has been loaded with an administration of political lame ducks. Production has fallen, losses have skyrocketed. Mexico, which once exported 50% of its oil, now has barely enough for its own increased consumption. And it is in grave danger of running out of oil if Poza Rica, the one rich field, should go dry--as overworked fields sometimes do.

Six-Year Job. Mexico may well have oil reserves up to six billion barrels a year. Under the new plan which Aleman is now pondering, that rich pool could be tapped with some 7,250 new wells, aimed at quadrupling production. But that is a six-year, $600,000,000 job, and that is where foreigners come in. To raise some of the money, private companies would be allowed to bid in two-thirds of the new fields, then export most of the production on a royalty basis.

Aleman well knows that all this packs a wad of political dynamite. Ex-President Cardenas could fan up hot opposition if the deal smacked of surrender. Soviet-grooved labor leader Vicente Lombardo Toledano, whose powerful Confederation of Mexican Workers recently lost the oil workers' union, might yell "foreign imperialism." The mass of inflammable Mexicans, who associate "Standard" and "Shell" with other indignities like the shelling of Veracruz, might suffer an attack of spontaneous combustion.

To forestall popular protest, politically astute Miguel Aleman would have to deal with wealthy independents, mostly Texans, rather than the familiar major oil empires. A reorganized Pemex would undoubtedly supervise the new setup in order to sustain the necessary fagade of national control. But the independents have reservations: they want guarantees of long tenure, assurances against labor strife. It will probably take a lot of gelatine to make the scheme jell.

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