North American Energy at the Crossroads

Abstract

The United States is the heart of North American energy markets, has recently emerged from history’s biggest oil boom, and is becoming the crossroads for an increasingly two-way trade in oil and gas with its two neighboring countries. The U.S. and Mexico, in particular, have much to gain from expanded energy trade. For example, the U.S. has become a global center of natural gas and light crude oil production that can meet the growing demand for power for Mexican consumers and fuel for Mexican refineries. And Mexico’s wind power resources in Tamaulipas would be most valuable if that power could be exported to centers of urban and industrial demand in Texas. Yet there is an increasing danger that this potential will be squandered. Growing movements against eminent domain, infra-structure permits, and energy exports in the United States and moves to re-nationalize the energy sector in Mexico are making energy companies increasingly wary of investing in the future of U.S.-Mexico energy trade. Ironically, politicians on both sides of the border accuse each other of being the source of uncertainty for the future of the North American energy industry. This Article shows how energy law changes in the U.S. and Mexico present under-studied dangers to cross-border energy trade and will set an agenda for legal reform to enable mutually beneficial fuel and power trade. And it will propose the basis for an energy agreement that could be adopted either by the United States Mexico Canada Agreement (USMCA) partners or by direct negotiations between the U.S. and Mexico to secure the benefits of increased energy trade and increase cooperation in energy and climate policy.