A Note on the Texas-Mexico Energy situation by Jorge Canavati

?Im sure that no one debates that Mexico should have a healthy autonomous energy system. But attacking FDI and the private sector is dangerous for confidence & stability and it is a key element for capital flight which is now at record levels. This is showboat nationalism, not healthy policies. It seems that the government has turned a blind eye to all of this having a false sense of security with the "remesas" (the funds wired from immigrants in other countries, mainly the U.S. to their families. Granted that the "remesas" are high up on the GDP, but feeling warm and fuzzy about this is very third worldish.

 Adding to all this, the government took advantage of the Texas freeze in March by attacking the dependence the country had on Texas gas because of the shut down and negative effects on the economy after the freeze. Again, no one debates that Mexico should have a healthy autonomous energy system. However, the future growth of the country will be such that domestic production alone will not be able to handle it, so imports will still play a key role. And what better supplier than your largest trading partner, Texas with cheap abundant natural gas. We also need to be reminded that it is not cheap to drill in Mexico.

 Political theatrics are taking over and blurring sensible optics. The trade relationship with Texas is fusioned at the root. Mexico buys Texas natural gas that fuels the manufacturing that is exported to Texas, the U.S. and to the world. What a great regional trading relationship. Tell me what would happen if the United States would get on the retaliatory soapbox by slapping heavy tariffs on the goods it imports from Mexico? The relationship is way beyond buying and selling of goods. It is a symbiotic supply chain that cannot be undone by going backwards. It will be very hard to have a successful USMCA agreement with only two of the three partners playing fair.