Mexico’s energy sector is in a precarious state, heavily reliant on natural gas imports from the US. Over 60% of its electricity is generated using natural gas, with around 70% of this fuel coming from across the border. This dependence has left the country vulnerable to supply disruptions, which could have severe consequences for the economy and daily life.
Risks of Dependence on US Natural Gas
A recent massive blackout in four Mexican states highlighted the risks of this reliance. The shutdown was triggered by a lack of natural gas supply. Experts warn that a prolonged disruption could cripple the economy and bring major cities to a standstill. This is not just a hypothetical scenario; a similar incident occurred in 2021 when a storm forced the temporary suspension of US gas exports to Mexico.
The US has become a reliable supplier due to its shale gas boom, particularly in Texas and New Mexico. The proximity and existing trade agreements made it an attractive option for Mexico. Today, over 70% of Mexico’s imported natural gas flows through an extensive network of cross-border pipelines spanning over 19,000 kilometers.
Political Tensions and Energy Security
However, this dependence on US natural gas has become a double-edged sword. Rising political tensions between the two countries, fueled by issues like immigration and trade, have created uncertainty around energy supplies. The US has imposed tariffs on various Mexican imports, and there’s a growing risk that it could use its energy exports as a bargaining chip.
Former US President Donald Trump’s protectionist policies and “America First” approach have raised concerns about the security of Mexico’s energy supplies. Trump has previously used natural resources as a tool for pressure, imposing tariffs on imports from other countries. If Mexico fails to comply with agreements related to the Colorado River, it could trigger a trade war.
Path Forward: Renewable Energy
To mitigate these risks, Mexico needs to diversify its energy mix. Renewable energy sources are the most viable alternative to reduce dependence on US natural gas. While Mexico has considered fracking to increase domestic gas production, this approach is fraught with environmental risks.
Current Plans and Challenges
Mexico’s current plans to boost national gas production to 5 billion cubic feet per day by 2030 seem ambitious, given the current economic uncertainty. The country lacks the necessary financial resources and infrastructure to diversify its energy sources in the short term.
Other alternatives like fuel oil or diesel are insufficient to meet current demand. Mexico’s energy security is at a crossroads, and the decisions it makes now will have long-lasting consequences. Transitioning to cleaner, renewable energy sources is crucial to avoiding a potential energy crisis and reducing its reliance on other nations.
