U.S. Energy Exports to Mexico Spiked

Energy trade between Mexico and the United States has historically been driven by Mexico’s sales of crude oil to the United States and by U.S. net exports of refined petroleum products to Mexico. Since moving to privatize its energy industry in 2013, Mexico has become heavily dependent on supplies of energy, particularly natural gas and gasoline, from the United States. Through 2014, Mexico’s exports of crude oil to the United States were the most valuable component of bilateral energy trade, with the overall value of Mexico’s U.S. crude oil sales far exceeding the value of U.S. net sales of petroleum products, primarily gasoline and diesel fuel, to Mexico.

From 2006 through 2010, for example, the value of U.S. energy imports from Mexico were two to three times greater than the value of U.S. energy exports to Mexico. For 2016, the value of U.S. energy exports to Mexico was $20.2 billion, while the value of U.S. energy imports from that country was $8.7 billion, according to the U.S. Energy Information Administration. The reason for the increase in Mexican demand for US gasoline is tied to the country’s energy reform plan. Over the course of 2016, gasoline prices in Mexico have increased by as much as twenty percent.

Mexico and US Energy trade

The bilateral energy trade situation with Mexico has changed significantly in recent years. In 2015 and 2016, the value of U.S. energy exports to Mexico, including rapidly growing volumes of both petroleum products and natural gas, exceeded the value of U.S. energy imports from Mexico as volumes of Mexican crude oil sold in the United States continued to decline. Mexico is second only to Canada in energy trade with the United States. Import and export values each reflect commodity volumes and their prices. Monthly trends in volumes through 2016 showed increasing U.S. petroleum product and natural gas exports to Mexico, with a generally declining trend in U.S. crude oil imports from Mexico.

Based on the latest annual data from the U.S. Census Bureau, energy accounted for about 9% of all U.S. exports to Mexico and 3% of all U.S. imports from Mexico in 2016.

Enery trade between Mexico and The US

Crude oil makes up most of the energy imports from Mexico, averaging 688,000 barrels per day (b/d) in 2015 and 588,000 b/d in the first 11 months of 2016. In 2015, Mexico was the source of 9% of crude oil imported by the United States, providing the fourth-largest share behind Canada, Saudi Arabia, and Venezuela. From 2006 through 2014, U.S. crude oil imports from Mexico were valued at an annual average of about $30 billion, but more recently, as both the volume of crude oil imports from Mexico and world oil prices declined, U.S. crude oil imports from Mexico were valued at $12.5 billion in 2015 and $7.6 billion in 2016. Mexico’s total crude oil exports have been declining as its oil production falls. Because Mexico has been sending more oil to countries in Europe and Asia, crude oil exports to the United States have been declining more rapidly than overall crude oil exports, according to the U.S. Energy Information Administration.

Petroleum products account for most of the value of energy exports from the United States to Mexico. In 2015, Mexico was the destination for 690,000 b/d of petroleum products, or 16% of all petroleum products exported from the United States. These exports were valued at more than $16 billion. In 2015, even though the United States exported more petroleum products to Mexico than in 2014, the value of those products was lower because of lower prices for fuels such as gasoline, distillate fuel oil, and liquefied petroleum gases.

Approximately half of Mexico’s gasoline imports come from the U.S. Today about 7.5 percent of the natural gas produced in the U.S. is exported, and more than 60 percent of those exports go by pipeline to Mexico. U.S. natural gas exports to Mexico rose to an average of 3.7 billion cubic feet per day in 2016, and there are indications that flows early in 2017 are exceeding 4.2 billion cubic feet per day. U.S. gas exports to Mexico are also doubled since 2009. A

According to Mexico’s national energy ministry (SENER), more than 60% of Mexico’s electric capacity additions between 2016 and 2020 are projected to come from natural gas-fired power plants, and significant natural gas capacity additions are expected to continue through 2029.

U.S.-Mexico trade in energy is covered by NAFTA. Revisions to U.S.-Mexico trade relations, any modifications to NAFTA is especially consequential for natural gas vulnerability, according to Jason Bordoff, Professor and Founding Director, Center on Global Energy Policy, Columbia University. Natural gas is not the only vulnerability Mexico faces. Crude oil trade also poses risks. While Mexico exports about 600,000 barrels per day of crude to the United States, U.S. refineries turn Mexican oil into gasoline and diesel, exporting it back to Mexico for use by Mexican consumers and businesses.