Mexico is the seventh-largest oil producer in the world. Petroleos Mexicanos, known as Pemex, is the country’s state-owned oil company.

Pemex pumps out more oil each year than Exxon Mobil. It pays for 40% of Mexico’s federal spending. And thanks to lack of investment, high taxes, corruption, anti-competition laws, Pemex is headed for collapse.

The bottom line, says Justice Litle in Taipan Daily, is that Mexico’s oil fields are running dry.

“Take the Cantarell field, for example. Cantarell is Mexico’s biggest field. In fact, it’s the second-largest oil field on the planet, behind only Ghawar in Saudi Arabia. In 2005, it came to light that Cantarell production had declined rapidly. ‘Fallen off a cliff’ is how some might put it, in terms of the speed and suddenness of the drop.

“If Cantarell production spirals downward into collapse, then Pemex — and, by extension, the entire Mexican economy — will be.”

To find out why the Mexican crisis could mean $200 oil becoming a reality read on here.