Passing Gas

That US natural-gas manufacturing boom? It’s happening in Mexico

July 2, 2013
Obsession
Energy Shocks
July 2, 2013

US Mexico gas exports

The shale gas boom has done a lot to boost the US economy. It’s such a big deal you can see it from space. All that new natural gas has lowered energy costs, which has led analysts to wonder if it could help make America’s energy-heavy manufacturing businesses more competitive with countries that have low labor costs but over-burdened energy infrastructure. But there’s a lot standing in the way of that vision, including the potential for gas exports to affect the value of the dollar, and the observation that maybe energy costs aren’t such a big deal.

But where the US is faltering, Mexico is taking advantage of all that cheap natural gas to boost factories; last year, pipelines brought more natural gas across the border than ever before. Mexico is already successfully competing with places like China on labor prices, but its energy costs are lower, too. Combine that with its proximity to the United States and deep integration into the American supply chain, and you’ve got a recipe for export-oriented success. Pemex, the country’s state-owned oil company, is spending $3.3 billion to build a new, 750-mile pipeline from Los Ramones, Mexico, near the country’s industrial heartland, to Agua Dulce, near Texas’ shale oil fields.

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