Gas price surge: A threat for the flagship fuel in Mexico’s electricity mix?

From the historic lows in 2020, oil and gas prices have skyrocketed. Oil derivates prices, like fuel oil No. 6 3%S1, have increased by more than 145%, while Henry Hub is at levels not seen since 2008. Fear that adequate winter stock levels in the US will not be achieved surged Henry Hub by 77% year-to-date, while winter prices traded as high as US$9/mmbtu. However, despite the increase in gas prices, gas-to-power demand shows a muted response. Mexico’s gas generation remains above 60% of the total mix without signs of slowing down. Will this trend continue, or will fuel switching displace gas-based generation to diversify the generation mix?