The value of energy trade between the United States and Mexico fell by nearly 15% to $66.5 billion in 2023, even though the volume of trade increased, according to the U.S. Energy Information Administration (EIA). The decline in trade value was primarily due to lower fuel prices.
Impact of Lower Fuel Prices
The EIA reported that the lower prices of fuel in 2023 more than offset the increased volume of energy trade between the two countries. Despite Mexico being the largest export market for U.S. petroleum products, including gasoline, diesel, and propane, the overall value of this trade diminished significantly.Trade Figures and Market Context
In 2023, global crude oil prices experienced a decline amid geopolitical tensions and demand concerns. The Brent crude oil spot price averaged $82.41 per barrel, a notable decrease from the $100.94 per barrel average in 2022. This drop in prices heavily influenced the value of energy trade between the U.S. and Mexico.
The U.S. imported an average of 733,000 barrels of crude oil per day from Mexico in 2023, marking a 15% increase from 2022. However, the value of these imports decreased by 4% due to the lower crude oil prices.
Similarly, U.S. exports of petroleum products to Mexico averaged 1.2 million barrels per day in 2023, reflecting a 1% increase from the previous year. Yet, when adjusted for inflation, the value of these exports dropped by 9%.
U.S. natural gas exports to Mexico also saw an increase in volume but a significant drop in value. In 2023, natural gas exports averaged 6.2 billion cubic feet per day, an 8% rise from 2022. Despite this increase, the trade value fell by 52%, again due to lower fuel prices.
Economic Implications
The dip in trade value despite rising volumes underscores the significant impact of fuel price fluctuations on international trade. The lower energy prices benefited consumers but led to decreased revenue from energy exports.
The EIA’s report highlights the complex dynamics of the global energy market, where geopolitical events and market conditions can drastically alter trade outcomes. The trade relationship between the U.S. and Mexico, particularly in the energy sector, remains vital for both economies. However, the 2023 data illustrates the challenges of maintaining trade value amidst volatile price conditions.
As the global energy market continues to navigate these complexities, stakeholders in both countries will need to adapt to these changing dynamics. The future of U.S.-Mexico energy trade will likely depend on various factors, including market stability, geopolitical developments, and technological advancements in energy production and distribution.
Source: Reuters
