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Who benefits from the U.S.' shale oil boom? Mexican manufacturing

Posting in Energy

Shale gas has been a tremendous boost to America's economy over the last few years, lowering energy costs and even prompting debate about whether it could make the U.S. more competitive relative to other countries with low labor costs but inefficient energy structures.

But the U.S. is not there yet, and some considerations still stand in the way, including the fact that gas exports could lead to "Dutch disease," a situation in which greater oil exports would drive up the value of the dollar and actually make U.S. exports less competitive on the world market.

While the U.S. determines how this new oil boom will affect its global competitiveness, however, one country seems perfectly poised to reap the benefits. Mexico, conveniently close to the U.S., is in a position to take advantage of the U.S.' cheap natural gas exports. Mexico's manufacturing sector has already been competing with China thanks to its supply of cheap labor, and thanks to its integration into the U.S. supply chain, it is able to compete on both labor and energy fronts. Indeed, Pemex, Mexico's state-owned oil company, has plans to build a $3.3 billion, 750-mile pipeline connecting Los Ramones, Mexico -- near the country's industrial center -- straight to Agua Dulce, close to Texas' shale oil fields.

Photo: Flickr/Jeremy Buckingham

via [Quartz]

— By on July 2, 2013, 9:55 PM PST

Channtal Fleischfresser

Contributing Editor

Contributing Editor Channtal Fleischfresser has worked for The Economist, WNET/Channel 13, Al Jazeera English, Wall Street Journal and Associated Press. She holds degrees from the University of Pennsylvania and the Columbia University Graduate School of Journalism. She is based in New York. Follow her on Twitter. Disclosure