Opinion - Why U.S.-Mexico energy interdependence must be strengthened

Yahoo

28-05-2025

Over the last decade, the U.S. has emerged as an energy superpower, not only in terms of production but also as a dominant exporter of natural gas and refined petroleum products. This transformation has redefined the U.S. trade balance in energy, turning a long-standing deficit into a robust surplus.
Nowhere is this shift more consequential than in the U.S.-Mexico energy relationship.
The U.S. Energy Information Administration estimates that natural gas exports to Mexico reached 199.2 billion cubic feet in January. That number is stunning when we consider that in January of 1990, the U.S. exported less than 1 billion cubic feet to Mexico, and by January 2012 was still only exporting 23.4 billion.
Today, Mexico imports more than 70 percent of its natural gas from the U.S., and a significant share of its gasoline, diesel and jet fuel as well, valued at $33.63 billion in 2024. These imports are not a luxury — they are essential for Mexico's industrial growth, transportation system and power generation.
For Mexico, reliable access to competitively priced U.S. energy is essential to sustaining economic growth, enabling industrial competitiveness and stabilizing the electric grid. At the same time, for the U.S., Mexico has become an indispensable customer, so much so that any downturn in Mexican demand would ripple through U.S. refineries, gas producers and the infrastructure companies that have built pipelines and terminals to serve the southern market.
This is a story of mutual interdependence, yet it is too often overlooked in political and policy debates in both countries. In times of flux for U.S foreign relations, and with a Mexican government committed to the principle of energy sovereignty, it is worth recognizing that the energy trade across our shared border is one of the most strategically important economic relationships we have — and one that deserves proactive stewardship.
Mexico's demand for natural gas has grown dramatically in recent years, driven by a combination of industrial expansion and the shift from oil-fired to gas-fired electricity generation. Yet domestic production has not kept pace.
Pemex, the state-owned oil and gas company, continues to underperform and investment in gas exploration and production has plummeted, while private investment has struggled to gain traction amid regulatory uncertainty. As a result, imports from the United States have filled the gap, with cross-border pipeline flows reaching record highs.
In 2024, the U.S. exported over 1 million barrels per day of refined petroleum products to Mexico, making it the single largest market for U.S. refiners. Mexico's aging refinery fleet cannot keep up with domestic demand for gasoline and other products.
The new Olmeca refinery at Dos Bocas, Tabasco, offers hope for Mexican refining, but without ongoing investment, other Mexican refineries will continue to operate at well below their capacity. Gasoline exports from the U.S. will continue to be essential for Mexico for many years to come.
The stakes are high. Mexico's manufacturing sector, including its booming automotive and aerospace industries, depends on stable and affordable energy. So does the everyday functioning of its economy.
If energy supplies were to falter due to political decisions, infrastructure failures or global price shocks, Mexico's economy would slow, with cascading effects across the region.
For U.S. gas producers and refiners, Mexico represents more than a convenient export market — it is a crucial buffer against domestic oversupply and price volatility.
The shale revolution has unlocked massive quantities of gas in Texas, Louisiana and Appalachia. Meanwhile, U.S. refineries, particularly along the Gulf Coast, are some of the most efficient and high-capacity facilities in the world. They depend on consistent offtake to remain profitable.
The symbiosis is clear: Mexico needs reliable energy imports to power its economy, and the United States benefits enormously from growing Mexican demand.
This dynamic has created jobs on both sides of the border, from Texas gas fields to Mexican manufacturing plants. It has also fostered deeper integration of infrastructure, with cross-border pipelines, rail links and storage facilities, with much more investment needed in the coming years.
Yet this interdependence is not without risk. In recent years, political uncertainty and nationalist rhetoric have threatened to disrupt the flow of energy trade. Mexico's efforts to reassert state control over its energy sector, including revisions to electricity market rules, slow permitting for private infrastructure, and the nationalization of certain assets, have introduced friction into what was once a smooth and expanding partnership.
In the U.S., political calls for energy dominance sometimes overlook the benefits of energy exports, while cross-border trade issues ranging from tariffs to environmental disputes can add further complexity. Climate-related concerns and the energy transition add another layer, as both countries seek to balance fossil fuel trade with renewable energy goals.
If Mexico's economy stumbles due to political instability, energy shortages, or falling investment, demand for U.S. gas and fuel will decline. And that could spell trouble for American producers and workers who depend on that export income.
Rather than retreating into nationalist positions or letting the energy relationship drift, policymakers on both sides of the border should treat U.S.-Mexico energy interdependence as a strategic asset.
This means ensuring policy stability and regulatory cooperation to maintain open energy trade channels. It means investing in cross-border infrastructure and exploring joint ventures in storage, liquefied natural gas and clean energy to future-proof the relationship. It means reinvigorating the bilateral energy dialogue to manage risks and formally strengthening the energy relationship through the USMCA review.
In the years ahead, Mexico will need more energy to power its ambitions, and the U.S. is uniquely positioned to supply it. But that relationship must be nurtured, not taken for granted.
A strong, growing Mexico is good for the U.S. And a thriving U.S. energy sector is good for Mexico. The energy relationship that binds our countries is not just a pipeline, but a shared economic future. Let's protect it.
Duncan Wood is an independent analyst and former president of the Pacific Council on International Policy.
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