Editor’s Note: NGI’s Mexico Gas Price Index, a leader tracking Mexico natural gas market reform, is offering the following column by Eduardo Prud’homme as part of a regular series on understanding this process.

Monterrey map

The big investment news in Mexico is Elon Musk’s intention to build a ~$5 billion Tesla plant in the thriving northern city of Monterrey. Mexico President López Obrador brought the issue to national attention when he expressed his objections to Musk’s choice of Monterrey, due to what he said was water scarcity. But Musk was adamant, and spoke personally with López Obrador over the matter.

Unlike locations in the south of the country, Monterrey and the State of Nuevo León in general is the area of Mexico with the best conditions for access to reliable and...