As the title mentions, this book offers a detailed account of the oil situation in Colombia and Mexico since the 1970s. The research was undertaken in recognition of the complexity of defining and studying oil as a commodity, if it can even be called that, embroiled in multiple geopolitical, economic and even military interests. The book develops a wide-ranging trajectory of the oil market, since the first well was drilled in Titusville (1859), and following that general and complex overview, it introduces the Cantarell oil fields in Mexico and Caño Limón, Cupiagua and Cusiana in Colombia. It also contains a valuable collection of databases on oil and the energy market, an analysis of these databases and a model of Dutch disease for each country, which allows the author to justify each of her arguments and theses.

The book is relevant and useful on both the general and specific level. Broadly speaking, the first three chapters present the history of the global oil market based on a logic in which oil is considered a strategic and political resource. Using this argument, the author analyzes the reserves in detail, as well as the behavior of prices, principal producers, the countries with the highest consumption, the role of other energies, and more. Based on the assertion that the international oil market is complex, chapters four, five and six incorporate the oil experiences of Colombia and Mexico, two pioneering Latin American countries in the oil market. Their position and relationship to the global market as price takers and nations with significant oil booms in the second half of the past century is analyzed.

The clear and precise analysis the author provides is easy to follow for readers new to the topic or who are not economists, meaning that people from all backgrounds will be able to enjoy the work. Although the book develops its ideas with a certain simplicity, it is still scientific, critical, purposeful and innovative with regard to the study of oil. Below, I will mention some of the most relevant points by chapter.

Chapter one, entitled, “Oil: A Global Commodity in a Market that Never Was,” introduces the rise of the oil market, highlighting the fact that a select group of countries maintains the majority of control. The analysis is divided into two periods, 1861-1970 and 1970-2012, which are in turn divided into sub-periods. It focuses on the evolution of prices and certain historical events, including: world wars, the age of the Seven Sisters, the advent of OPEC, the Cold War, the 2008 financial crisis, and more.

Chapter two discusses short and long-term oil price determinants. The former include management of production capacity, while long-term factors include renewal of reserves, the role of greater investment in increasing productive capacity and reserve management strategies as a way to control prices and extend the lifetime of reserves.

In keeping with the logic of chapter two, the next chapter introduces determinants of oil supply and demand on the global level. It begins with a scheme proposed by the Energy Information Administration (EIA), which, based on a supply and demand model, relates the oil market to other energy supplies and other sectors. It then incorporates the issue of energy insecurity, derived from the fact that oil is highly concentrated in the Middle East and OECD members are highly dependent on oil resources. Some of the data in the book reveals that the OECD only has 10% of oil but consumes over 50% of the total, while 80% of reserves are concentrated in OPEC countries. This is one of the most relevant issues in the energy market and affects developed and developing countries alike; countries must ensure fuel supplies to maintain domestic stability and reduce uncertainty in case of emergency. Policies and measures to guarantee the energy supply open the door to other debates and create other problems, including the shale gas boom and the emergence of biofuels as an option to reduce oil dependency. Besides being an alternative to oil dependency, the combustion process for biofuels is known to be less environmentally damaging. The problem is that biofuel production affects food prices due to the transfer of previously fertile land allocated for food production to single-crop uses needed to produce biofuels. Despite the rise of energy alternatives, the author concludes that oil is and will continue to be the principal source of energy (supported by estimates made by the IEA).

Chapter four depicts the main features of the oil sector in Colombia and Mexico since its early days. In Mexico, that dates back to the first decade of the twentieth century, during the Porfirio Diaz administration (1876 to 1910), and in Colombia, to right after the Thousand Days’ War (October 1899-November 1902). The chapter is divided into three time periods; the first encompasses the economic liberalism of 1900-1945, when oil became essential to national economies. The second is the post-war period of import substitution and the debt crisis, from 1945 to 1982, and finally, the period of economic liberalism, 1982-2012.

In keeping with the analysis of Colombia and Mexico, chapter five examines how oil wealth has been managed and directed during booms. Two types of booms are analyzed: prices and quantities. Presence in the domestic and foreign markets is analyzed, and specifically, the relationship and dependence of public finances on the oil market.

Finally, chapter six develops an econometric model for each country, focusing on the effects of each of the oil booms. The results confirm that the way in which the oil booms in Mexico and Colombia were managed engendered oil dependency, reflected in lower growth rates for tradable sectors (agriculture and manufactures), low job growth and massive imbalances in public spending, corroborating the effects of Dutch disease.

By way of conclusion, the book offers a comprehensive analysis of oil, in which historical and political facts, databases and econometric models are essential to understanding the economic, strategic and political plans of any nation. For Latin American economies, and many others, oil is a strategic raw material to drive growth and development. However, as the author demonstrates, basing economic growth on oil alone, or on any single natural resource, creates short-term illusions and long-term problems and disadvantages.