Latin American countries are becoming more reliant on costly fuel imports amid floundering efforts to bolster domestic oil output and expand refinery capacity.
Incomplete reform projects and budget cuts that have stalled investments are aggravating the situation for many Latin American countries. For refiners in the United States, it is a bonus: They have in their own backyard a ready market for rising fuel exports.
Overall, the 30 nations in the region bought 2.32 million barrels per day (bpd) of diesel, gasoline and other fuels last year from the United States, up 67 percent from 2011, according to the Energy Information Administration.
Demands for U.S. imports are rising in the region's biggest economies, up 199,000 bpd or 29 percent last year in Mexico and 75,000 bpd or 94 percent in Brazil, contributing to the gains.
"We need to build joint ventures to find the capital the refineries require," said the head of Mexico's oil regulator, Juan Carlos Zepeda, referring to his own country. "And we need to produce more gas," he added in comments earlier this month.
But getting there will take time, and in Mexico, energy reform is likely to lead to more imports as the retail market is liberalized, before upstream reforms can boost domestic production.
Cheaper fuel prices have made it easier for these countries to buy in recent years. Latin America's bill for fuel imports from the United States fell to about $47 billion last year from $51 billion in 2015.
Needs seen growing
But if last year's imports were measured at 2012's peak prices, the fuel tab would have been twice as large. Any spike in oil prices would hit countries hard, given the increased volumes they need.
"With demand increasing and a stable refining capacity, the region's import needs will continue to grow," said Jake Fuller, a senior analyst at consultants IHS Markit.
American refiners along the Gulf Coast are well-placed to continue supplying the region. In contrast, Latin America's state-controlled refinery firms have little capital or outside investment interest in expansions or overhauls, Fuller said.
As fuel imports rise, crude shipments from the region's energy producers are falling. Latin America exported 5.2 million bpd in 2016, according to Reuters Trade Flows figures. The United States buys just under half of the region's crude exports.
Reforms that encourage producers to bring capital to oilfields are under way in Mexico and Argentina. "We are in the right path," said Miguel Gutierrez, president of Argentina's state-run YPF SA, when asked about political change in his country earlier this month.
Analysts offer a simple fix for Latin America's dependence on fuel imports: Build more refineries and halt the subsidies that push up demand. Political realities often collide with such remedies, however.
In Ecuador, Venezuela and some Caribbean nations, heavy consumer subsidies have stymied efforts to attract outside investment.
Mexico this year raised prices on gasoline by up to 20 percent in a move that caused public protests.
"We made this very unpopular move to increase prices. Mexico was along with Ecuador and Venezuela in the group of Latin American countries with the cheapest gasoline in the world," said Pemex director Jose Antonio Gonzalez Anaya.
Brazil is tackling its needs using third-generation fuels from sugar cane and power generated from biomass waste.
"Brazil is in a good position to lead the regional change," Decio Oddone, director of Brazil's oil regulator ANP, told Reuters. "Diversity has been key to address the consumption growth."
Brazil, the world's second-largest producer of ethanol after the United States, is able to offer gasoline blended with more than 25 percent biofuel thanks to its huge production volumes.
Hydroelectric also provides two-thirds of its power generation.
But for now, Brazil stands out in a region where recent economic struggles have curtailed most investments in such alternative energy sources.