Mexico's Oil Revolution

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NEW YORK (TheStreet) -- Americans don't understand Mexico. So here's a family legend for them.

A century ago, the story goes, a lady in my wife's family married a Mexican man. With some trepidation, the Texas side invited these folks to one of their family reunions, but didn't really mingle. Then the Mexicans invited the Texans over, and those who went found that the woman had married into one of the country's top business families and that we were the poor relations.

Ever since then I've been threatening, in jest, to jump the Texas-Mexico fence the other way.

Mexico is not nearly as poor as we pretend. Its culture is older than ours, its top billionaire is richer than ours, the soccer is better than ours. And Mexico has got oil, lots of it. Its part of the Gulf of Mexico is as rich in it as our gulf, and the Eagle Ford shale play that Americans are so hopped up about extends deep into Mexico.

What the new PRI government of Enrique Pena Nieto has proposed is that the country's 1938 constitution be changed so that "foreign" (read U.S.) oil companies can participate in new oil finds. It's a technology swap, with American drillers working with the national oil company, Pemex, and getting a piece of the action.

Pena Nieto is trying to get ahead of his main political opposition, the former ruling party called PAN, which recently sought to completely break the Pemex monopoly, removing it and the CFE electrical monopoly from government control.

With the PAN pushing for a greater market opening, and the PRI itself holding a majority of seats in the legislature, Pena Nieto's plan has a pretty good chance of passing, even though it requires a change in the constitution.

Under the PRI plan, Pemex and CFE would be split into two units, with the private side able to take on foreign partners.

Exxon Mobil , Chevron , and oil companies in Venezuela and Argentina have all expressed interest, noting that Pemex is relying on obsolete technology and that newer equipment could quickly boost offshore production.