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U.S. natural gas market sees big benefits from NAFTA

U.S. natural gas market sees big benefits from NAFTA

WASHINGTON: As Congress begins to examine the North American Free Trade Agreement at the behest of President Donald Trump, lawmakers need to ensure that nothing they decide disrupts one of the more relevant industries in the pact: energy — in particular, natural gas. U.S. producers need Mexico, their largest customer. The glut of production in the U.S. far exceeds domestic demand; thus, exports prevent a collapse in natural gas prices. More than a quarter of Mexico’s electricity is powered by U.S. natural gas, leaving it vulnerable in a trade battle. Trade disputes mean U.S. producers would suffer a serious loss of income, while Mexico would face an energy shortage that could wreak havoc on its economy, drive up crime and potentially create a new refugee crisis. In many ways, Trump’s support of the U.S. energy sector conflicts with his desire to see the 23-year-old agreement revamped or even ended. While Trump believes the agreement has stripped Americans of jobs and opportunities, Nafta has actually been a boon to the energy sector and to employment.

Natural gas exports to Mexico, which have been increasing across the U.S. border since 2010, reached near-record highs this year through May, averaging 4.04 billion cubic feet per day, up from an average of 3.78 billion in 2016. The U.S. had an energy trade surplus with Mexico of more than $11 billion last year. The value of U.S. energy exports to Mexico in 2016 was more than twice the value of the energy imports. Mexico accounts for more than 60 percent of all U.S. natural gas exports, according to the Energy Information Administration. The U.S. is emerging as a net natural gas exporter with exports exceeding imports in three of the first five months of this year, putting the U.S. on course to reverse 60 straight years during which the nation was a net importer.