US Energy Security Relies on Canada and Mexico, Executives Say

Bloomberg reported on June 28, 2026, that North America’s energy infrastructure operates as two powerful bilateral relationships rather than a single, integrated three-country system. Howard Energy Partners CEO Mike Howard stated roughly 70% of Mexico's energy originates from the United States. Former Canada Energy Regulator CEO Gitane De Silva noted about 60% of U.S. crude oil imports come from Canada. As USMCA renegotiation talks approach, a consensus among executives and experts is that the current trade arrangement functions effectively and requires minimal alteration.

Context — [why this matters now]

The current stability of North American energy flows is historically significant. The last major disruption occurred in 2005 when Hurricanes Katrina and Rita damaged Gulf Coast infrastructure, causing U.S. gasoline prices to spike 46% in a month and exposing import dependency. The modern framework was solidified by the 2019 USMCA agreement, which preserved key energy provisions from NAFTA, ensuring tariff-free trade in energy goods.

The current macro backdrop features U.S. benchmark West Texas Intermediate crude trading near $78 per barrel and Henry Hub natural gas prices around $2.70 per MMBtu. The trigger for the current analysis is the scheduled review and potential renegotiation of the USMCA, which begins in 2026. This process mandates a joint review every six years, creating a formal catalyst for policy discussion that directly impacts continental energy security and investment timelines.

Data — [what the numbers show]

Cross-border energy trade represents a massive volume of daily commerce. The United States imports approximately 4.3 million barrels per day of crude oil and petroleum products from Canada. In return, the U.S. exports about 6.5 billion cubic feet per day of natural gas to Mexico via pipelines. This flow powers an estimated 70% of Mexico's electricity generation.

U.S. energy trade with its neighbors shows a dramatic shift over two decades. In 2005, the U.S. imported just 1.6 million barrels per day from Canada. The current level of 4.3 million bpd represents a 169% increase. This growth contrasts with total U.S. petroleum imports, which have fallen 35% since their 2005 peak due to rising domestic shale production.

Pipeline infrastructure is the critical enabler. The U.S. has over 70 active pipelines crossing its northern border and more than a dozen major pipelines crossing into Mexico. The value of U.S. energy exports to Mexico exceeded $50 billion in 2025. Canada's energy exports to the U.S. were valued at over $120 billion for the same period.

Analysis — [what it means for markets / sectors / tickers]

The stability of this trade system benefits specific sectors and companies. Midstream energy infrastructure firms with cross-border assets, like TC Energy (TRP) and Enbridge (ENB), gain predictable cash flows from these essential trade routes. Refiners in the U.S. Midwest and Gulf Coast, such as Marathon Petroleum (MPC) and Valero (VLO), benefit from reliable access to discounted Canadian heavy crude, which improves their refining margins.

A key limitation is the concentration risk for Mexico, whose heavy reliance on U.S. natural gas could expose it to price volatility and supply constraints during extreme weather events in North America. Conversely, some U.S. producers argue that export commitments limit domestic supply and put upward pressure on local prices. The investment flow is clearly positioned for continuity, with capital expenditures focused on maintaining and marginally expanding existing pipeline networks rather than building fundamentally new trade corridors.

Outlook — [what to watch next]

The primary catalyst is the formal start of USMCA review talks, expected in Q3 2026. Market participants will monitor for any proposals to alter the energy chapter's proportionality clause, which requires a party to maintain proportional access to energy resources during a supply shortage. The second catalyst is the U.S. presidential election in November 2026, as the winning administration's trade policy stance will shape negotiation dynamics.

Key levels to watch include U.S. natural gas storage inventories versus the five-year average, as low stocks could test export commitments. The price spread between Western Canadian Select crude and West Texas Intermediate is another critical gauge; a widening discount could signal transport bottlenecks or rising political risk. Permitting timelines for pipeline maintenance and expansion projects will serve as a barometer for regulatory cooperation.

Frequently Asked Questions

How does Mexico's energy reliance on the U.S. impact its manufacturing sector?

Mexico's industrial sector, particularly automotive and appliance manufacturing clustered near the border, depends on affordable and reliable U.S. natural gas. This energy cost advantage is a pillar of Mexico's nearshoring appeal. Any sustained increase in U.S. gas prices or disruption in cross-border flows would directly raise production costs for companies like Grupo Bimbo and Nemak, potentially eroding the competitive edge that drives foreign direct investment into the country.

What is the historical context for the 60% figure for Canadian oil imports?

The U.S. reliance on Canadian oil has steadily increased since the 1980s, but it accelerated sharply post-2010 with the development of Canada's oil sands and the U.S. shale boom. The shale revolution altered U.S. import needs, reducing demand for light crude from other regions and increasing demand for heavy Canadian crude to balance refinery slates. This symbiotic relationship solidified after the U.S. lifted its crude export ban in 2015, allowing for more efficient two-way trade.

Could renewable energy development reduce this cross-border energy interdependence?

Renewable energy development, particularly in solar-rich Mexico and hydro-rich Canada, will alter but not eliminate interdependence. Cross-border electricity trade is already growing, with the U.S. importing Canadian hydropower to balance intermittent wind and solar. The infrastructure for electrons differs from molecules, requiring new high-voltage transmission lines. This creates investment opportunities for utilities like American Electric Power (AEP) but does not replace the foundational role of oil and gas trade in the near to medium term.

Bottom Line

North American energy security is built on stable, high-volume bilateral trades that industry leaders believe should persist through upcoming USMCA negotiations.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.