Mexico Oil Expropriation

Background to Mexico's oil expropriation
Industrial Revolution (18th-19th century). International oil companies increased their popularity and importance within the economic life of several countries, including Mexico.

Porfirian dictatorship (1876-1911). The participation of foreign capital is considered essential for the development of the country, which is given all the facilities to manage the resources. In addition to having under its control almost all the civil authorities of the oil zone and setting the prices of essential products in the stores of stripe. In addition, companies had taxes for the establishment and maintenance of their industries.

Mexican Revolution (1910). The oil industry departs from the general economic process of the country. Two foreign companies predominate in the country: Standard Oil (Exxon) of North American capital owned by Rockefeller, and Royal Dutch constituted by Dutch and English capital.
60% of Mexican oil was in the hands of English companies and 39.2% in the hands of North Americans.

Constitution of 1917. Article 27 indicated the right of the nation to have exclusive property of the land, the subsoil and the waters in the limits of the Mexican territory; which was against the interests of foreigners.

1935. Foreign companies try to prevent the formation of unions, however oil companies manage to form unique unions with very different working conditions.
On December 27, 1935, the Single Union of Oil Workers is formed.

1936. On January 29, the Single Union of Oil Workers joined the Proletarian Defense Committee, and from which the Confederation of Mexican Workers (CTM) arose. On July 20, 1936, the Union held its first convention, and formulated a draft general contract with all the companies calling for a strike to demand compliance.
Lázaro Cárdenas (President of Mexico) intervenes unsuccessfully to get the companies to sign the contract, so the strike is postponed for 4 months, and it is extended for 2 more months, waiting for it to be signed.

1937. On May 28, the strike broke out, paralyzing the entire country by not dispensing gasoline for twelve days. The workers refuse to end the strike and the companies declare they have no funds to meet the demands of workers even though "the Mexican oil industry produces yields much higher than that of the United States. United".
A series of labor events are followed before the Conciliation and Arbitration Board, ruling in favor of the workers and demanding from the oil companies the payment of 26 million pesos of salaries fallen; fact that they did not comply, and they protected themselves before the Supreme Court of Justice.

1938. On March 3, the Supreme Court of Justice denied protection to the oil companies and forced them to raise wages and improve the working conditions of their workers. President Lázaro Cárdenas offers to mediate before the union to accept the payment of the 26 million pesos and not 40 million, as demanded. In this act of the president, the businessmen of the oil companies question the ability of the President to achieve it, being that act of distrust, which finally led to President Lázaro Cárdenas deciding to end such a long conflict and announce the expropriation oil company.

Petroleum Expropriation. On March 18, President Lázaro Cárdenas announces his decision to expropriate the oil industry in the face of the refusal to submit to national laws, announcing that this industry was totally Mexican.
The US government accepts the decision of President Cárdenas, however, for a time no country bought oil or silver from Mexico.
The entire country supported Cárdenas, and a huge demonstration was held, which is said to have been attended by about one hundred thousand people, collections are made public institutions in which the necessary money is collected to compensate the affected companies, which by 1943 had already accepted the compensations.
The expropriation was the result of a chain of events that had called into question the sovereignty of the country and for this reason this decision filled the people of Mexico with joy.
PETROMEX gradually absorbs the concessions On June 7, 1938, the decree creating Petróleos Mexicanos was published.
The 17 foreign oil companies expropriated were: Compañía Mexicana de Petróleo El Águila, (London Trust Oil-Shell), Mexican Petroleum Company of California (now Chevron-Texaco the second global oil company) with its three subsidiaries: Huasteca Petroleum Company, Tamiahua Petroleum Company, Tuxpan Petroleum Company; Pierce Oil Company, a subsidiary of Standard Oil Company (now Exxon-Mobil, the world's largest oil company); Californian Standard Oil Co. of Mexico; Compañía Petrolera Agwi, SA., Penn Mex Fuel Oil Company (now Penzoil); Stanford and Company Sucrs. Richmond Petroleum Company of Mexico, now (ARCO); Compañía Exploradora de Petróleo la Imperial SA., Gas and Fuel Company Imperio y Empresas; Mexican Sinclair Petroleum Corporation, still Sinclair Oil; Consolidated Oil Companies of Mexico SA, Sabalo Transportation Company; and finally the Mexican Gulf Petroleum Company (later called Gulf).
The success of the expropriation depended on the government's ability to keep the industry running despite the absence of trained personnel. During the first years the government depends almost entirely on the Union of Petroleum Workers of the Republic Mexicana (STPRM), there are constant conflicts due to the struggle between the government and the union for its control and administration.
The oil industry contributes a considerable amount of income to the national economy due to the large export volumes, in addition to generating employment for thousands of workers.