Opinion: Could Mexico make America great again? The energy equation

Energy whitethorn beryllium the astir foundational pillar down everything we’ve discussed truthful far: re-industrialization, nearshoring, AI and North American competitiveness. You don’t tally factories, servers oregon proviso chains without reliable, scalable and affordable power. Energy isn’t a broadside communicative — it’s the operating strategy of modern economical activity.

Mexico’s relation successful this strategy is often framed done an outdated lipid lens.

Forty years ago, that framing made sense. In 1982, Mexico exported astir $24 billion, and astir 65% of that was crude oil. Today, Mexico exports much than $620 billion, with lipid representing just 3.5% of the total, portion manufacturing accounts for astir 90%. In different words, Mexico’s system has transformed from being oil-dependent to manufacturing-driven — and manufacturing is, supra all, energy-intensive.

This translation has tied Mexico and the United States unneurotic done vigor flows that are structural, not optional.

Looking lone astatine imports, the integration is adjacent clearer: virtually each of the earthy state Mexico imports — implicit 99% — arrives via pipeline from the United States, reflecting a precocious grade of carnal and commercialized interdependence betwixt the 2 vigor systems, peculiarly U.S. producers successful Texas, for whom Mexico has go a captious and unchangeable export outlet.

Natural state present anchors Mexico’s energy generation, concern production, and export manufacturing — overmuch of which straight supports U.S. proviso chains.

The effect is clear: nether galore commercialized measures, the United States present runs an vigor surplus with Mexico, meaning the worth of U.S. vigor exports to Mexico exceeds the worth of Mexican vigor exports to the U.S. This surplus supports U.S. GDP, sustains jobs successful vigor accumulation and refining, and strengthens America’s presumption successful planetary vigor markets.

As documented by the U.S. Energy Information Administration, this integration is neither impermanent nor marginal. Pipeline shipments of U.S. earthy state to Mexico person accrued by an bid of magnitude since the aboriginal 2000s, and contiguous the bulk of U.S. pipeline exports travel southbound of the borderline alternatively than overseas.

U.S.-Mexico Border Crossing Natural Gas Pipelines and Expansions of Mexico’s Domestic Pipelines

Data source: U.S. Energy Information Administration and Comisión Nacional de Hidrocarburos, Mexico. “U.S. earthy state pipeline exports to Mexico person grown successful caller years arsenic the home pipeline web wrong Mexico continues to expand.”

This is wherefore vigor argumentation cannot beryllium an afterthought successful debates astir economical strategy oregon geopolitical competition. Mexico is not peripheral to U.S. vigor information — it is central to it. American vigor production, refining, and export capableness are progressively linked to Mexican demand, infrastructure, and concern growth. Likewise, Mexico’s quality to prolong its manufacturing basal and seizure nearshoring opportunities depends connected continued entree to U.S. vigor and predictable concern conditions.

If the United States wants to stay an vigor powerhouse, it cannot bash truthful alone. It’s not conscionable astir drilling successful Texas oregon New Mexico — it’s astir astute partnerships, beardown commercialized frameworks and moving intimately with reliable neighbors.

Seen this way, vigor fits people with the different themes successful this series. If AI is the encephalon of the aboriginal economy, vigor is the bloodstream. And today, that bloodstream flows crossed North America.

Catch up connected parts 1-5 of Could Mexico marque America large again? here:

• Part 1: An introduction
• Part 2: A primer connected China
• Part 3: Zeroing successful connected the demographics
• Part 4: About that commercialized deficit
• Part 5: How the AI contention changes the game 

Pedro Casas Alatriste is the Executive Vice President and CEO of the American Chamber of Commerce of Mexico (AmCham). Previously, helium has been the Director of Research and Public Policy astatine the US-Mexico Foundation successful Washington, D.C. and the Coordinator of International Affairs astatine the Business Coordinating Council (CCE). He has besides served arsenic a advisor to the Inter-American Development Bank.