As in many other countries, Mexico's distillate demand has proven more resilient than its gasoline demand. Whereas gasoline consumption reached a plateau after the 2008-2009 financial crisis, distillate demand growth paused only briefly, adding more than 40,000 bbl/d in 2010-2011. Growth over the 2004-2007 period had exceeded 60,000 bbl/d (IEA estimates). Yet while demand growth fully explains increases in distillate imports up until 2009, that is not the case afterwards. Demand for distillates grew faster than imports in 2004-2007 and remained roughly flat in 2008-2009 even as overall imports fell, thanks to rising domestic production at the time. In 2009-2011, in contrast, demand growth accounted for little more than half the rise in imports. As in the case of gasoline, declines in refinery production were a key driver of the rise in imports.
While rising Latin American oil demand has generally supported growth in U.S. oil product exports, recent trade flows between the United States and Mexico show a twist in that pattern. The driving force behind growing U.S. exports to Mexico since 2009 has been less underlying demand growth than shifts in supply patterns, including production problems at local refineries and declining imports from other, more remote sources - Europe for gasoline and Japan for distillate. Absent stronger consumption growth, a rebound in Mexican refining output could back out U.S. product exports. But while a string of recent mishaps at Mexican refineries is unlikely to be repeated soon, neither may strong growth in Mexican refining output be likely in the short term, given strong competition for oil investment from the upstream sector and the priority given to stemming, if not reversing, recent crude production declines. However, just as Mexican demand growth rates show notable product-by-product differences, so, too, is the outlook for U.S. product exports to Mexico likely to vary somewhat product by product. If recent patterns are any guide, U.S. gasoline exports to Mexico, following several years of robust gains, look set to stabilize. In contrast, all things being equal in U.S. domestic refined product markets, more robust underlying Mexican demand growth may continue to support U.S. distillate exports south of the border, even in the event of a recovery in Mexican refinery activity.