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Could Trump’s position on NAFTA upend natural gas?

June 29th, 2017 under Top Stories » Uncategorized

By NICK WINCHESTER

nick@bigbendnow.com

MARFA — With the Trans-Pecos Pipeline not even three months in service, one of Trump’s campaign-trail favorites – the renegotiation (or withdrawal) of the North American Free Trade Agreement (NAFTA) – could threaten its future.

In April, Trump indicated his intentions to renegotiate NAFTA via his preferred avenue of communication: Twitter. “I received calls from the President of Mexico and the Prime Minister of Canada asking to renegotiate NAFTA rather than terminate,” Trump wrote. “I agreed, subject to the fact that if we do not reach a fair deal for all, we will then terminate NAFTA.”

Because the production of natural gas in the U.S. far exceeds its domestic demand, natural gas companies survive by selling a great deal to their largest customer, Mexico, according to The New York Times. This reliance could cost the energy industry billions if the NAFTA agreement is messily renegotiated or withdrawn completely.

In Mexico, where more than a quarter of electricity is powered by American natural gas, the threat of no longer receiving a supply from across the border has prompted officials to seek out other sources. Following Trump’s recent threats to NAFTA, Mexico began to explore importing liquid natural gas from countries like Peru, the Times reports.

The Trans-Pecos Pipeline takes natural gas from Pecos County and transports it to Mexico, crossing the Rio Grande near Presidio.

Both NAFTA and natural gas are important to the Texas economy, and Texas lawmakers have made their concerns clear about the administration’s proposed renegotiations.

“NAFTA is vitally important to the state of Texas, with free trade adding billions of dollars to our economy annually,” Texas U.S. Senator John Cornyn said in May.

Representative Will Hurd, whose district lines the border from just outside El Paso down to Laredo and includes Far West Texas, said, “Trade is the lifeblood of many communities in my district. The U.S., Mexico and Canada are not competitors, but partners who build things together. It is now more important than ever that we strengthen our relationship as allies and partners, so we can work together to increase economic opportunities on both sides of the border.”

The energy industry will be thankful to have former Texas Gov. and now Energy Secretary Rick Perry on their side. Perry was on the board of Energy Transfer Partners (ETP), a position he left in January to take up his position in the administration. When Perry announced his Presidential campaign, his biggest donor was ETP’s Kelcy Warren. ETP owns and operates the Trans-Pecos Pipeline.

With Perry, and the state of Texas behind it, it’s unlikely the administration will undergo NAFTA renegotiations without keeping natural gas in mind. But Trump will have to tone down his Twitter-diplomacy if only to keep Mexico from seeking their supply elsewhere.

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One Response to “Could Trump’s position on NAFTA upend natural gas?”

  1. Ascension says:

    This article is rather broad and vague. It’s easy to say “industries” are important to regions, and that is, after all, the favorite sayings of all private industries. But it’s also a rather convenient way to gloss over very real specifics.

    This project is not really going to significantly uplift the average citizen of Texas nor this country. Sure, the corporation made donations to the local library and such, and that was very nice. But we all know that it’s a private, profit-making enterprise. And God bless ’em.

    But negotiating international trade agreements rises above just the specific, local business interest. Sure they get a voice, and thank you for relaying the energy sector voice thru your article. But we know that big biz and private interests are very good at rallying politicians to their side. And yes, we need industries that provide jobs. But it doesn’t really inform us to just blandly state that their interests are OUR interests by default. Not necessarily true.

    The fact that Mexico may NOW be scrambling to find other sources of energy is not the weakness of our negotiating position, it is our strength. Importing liquid gas from Peru is NOT what Mexico wants to do; it is far more expensive and cumbersome and will be instantly, nationally unsettling. No, they very much want to buy gas from Texas private suppliers, and to suggest that our chief negotiator should take that card off the table is blind and one-sided reporting.

    I’ve written on energy sectors myself in the past. You need to be more than just parrot of the voice of the private sector, just as your closing remark that the President of the United States must “tone down” his comments, clearly shows. The perspective of this article is not wholly complete.

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