Was the balance of the privatization of the Energy Reform in Mexico really positive?

Abstract

Objective: The paper is aimed to assess whether the balance of the privatization of the Energy Reform (RE) in Mexico was positive on its objectives of increasing oil production and lowering the gasoline price. Methodology: the econometric test of structural change from Chow (1960) is implemented. The periods to be analyzed are two six-year terms: the first prior to the RE, under the administration of President Felipe Calderón Hinojosa, and the second when the RE of President Enrique Peña Nieto is implemented. Data: Monthly data from the National Institute of Statistic and Geography (INEGI for its acronym in Spanish) is used for the period 2006-2016. The empirical results suggest the absence of a structural change between the two six-year periods analyzed. Apparently the RE did not achieve the objectives analyzed here. Novelty: No previous studies with econometric analysis have been found to evaluate the structural change that RE supposes in Mexico. Therefore, the analysis proposed in this document is novel. Limitations: This research is limited to studying the objectives of the RE concerning an increase in oil production and a decrease in the price of gasoline. Other objectives of the RE are outside the scope of this document. Further analysis could benefit from the introduction of other objectives.