Lower fuel prices dent value of soaring US-Mexico energy trade

The value of energy trade between Mexico and the US fell by almost 15% in 2023, the US Energy Information Administration (EIA) said on Monday, as lower prices for fuels offset an increase in the volume of trade.

Adjusted for inflation, the value of energy trade between the two countries fell from US$77.8 billion in 2022 to US$66.5bn in 2023. 

The volume of energy trade between the two countries continued to rise, the EIA emphasized, driven mainly by Mexican imports of US refined petroleum products and natural gas.

In 2023, Mexico was the largest export market for US petroleum products, the EIA said. Exports of these products averaged 1.2Mb/d (million barrels per day) in 2023, up 1% from 2022.

Petroleum products accounted for 87% of the total energy exports from the US to Mexico in 2023. 

Mexico's aging refinery system, operated by national oil company Pemex, is unable to supply domestic demand for products such as gasoline, diesel and propane. 

Outgoing Mexican President Andrés Manuel López Obrador has admitted that he will fail to achieve his goal of ending fuel imports. The new Olmeca refinery, which has been troubled by cost overruns and major delays, is unlikely to be in operation before the end of this year.

The US did not export any crude oil to Mexico in 2023, but imported 15% more crude from its southern neighbor. US crude oil imports from Mexico averaged 733,000b/d in 2023 and accounted for 81% of all its energy imports from Mexico. 

Meanwhile, the US exported a record 6.2Bf³/d of natural gas to Mexico las year, or 8% more than in 2022. Natural gas exports to Mexico represented 13% of all US energy exports to Mexico, the EIA said.

Given shortages in domestic gas supply, key Mexican industries such as power generation and petrochemicals are highly dependent on natural gas supplies from the US.

Most of the growth in US gas supply to Mexico has come from exports from West Texas, which increased 20% (1.6Bf³/d) compared with 2022, the EIA said.

Natural gas pipeline exports from West Texas to Mexico have grown steadily as more connecting pipelines in Mexico have entered service in recent years.