The ‘Stunning’ North American Energy Network
How important to the U.S. economy is the North American energy network established by NAFTA?
What’s been created the last 25 years is absolutely stunning, and it builds on what we’ve constructed over the last 50 years, which is an intermodal rail network where one can move from Montreal to Monterey in a very quick period of time. And looking forward, in the modernization talks there’s already been agreements on liberalization of capital flows. Now, this is absolutely critical, because we are on the cusp of achieving something fundamentally different than anything we’ve ever seen on this continent. We are now in the formative stages of putting together an integrated North American energy market and an integrated North American energy infrastructure.
What do you predict if the U.S. does not withdraw?
You’ll see capital flow from Canada, the United States, into Mexico, facilitating the modernization of the antiquated Mexican energy infrastructure. That will then facilitate a boom in energy markets and energy companies. The U.S. and Mexico will then have the capability to export oil and liquefied natural gas all around the world.
What role does a strong energy infrastructure have on the U.S. economy, and how does capital flow play into that?
A component of NAFTA modernization are capital liberalization rules, which will result in a flow of capital both from Canada, the United States, into Mexico to begin to take the next step in constructing the North American energy infrastructure. And this is absolutely critical, given where we are and where the U.S., our Canadian trade partners, and most of all Mexico needs to go. If we take this step, we will create the conditions for North America to be the energy-dominant player around the world.
How will this energy dominance impact other regions in the world?
Many people don’t know that the number one consumer of American oil exports is China. I’m quite confident if we complete this North American energy infrastructure, the number one purchaser of North American liquefied natural gas products will be Europe. That’s two growing markets, one with a luxury segment, another that’s an emerging market. Both encourage expansion of American growth and, of course, a booming energy market.
This will decisively impact the U.S. middle market in a positive fashion, and something I would think almost anybody who owns a middle–market firm or participates in that ecosystem would support.
Privcap interviews Joe Brusuelas, chief economist for RSM, on how withdrawal from NAFTA could rock the global energy sector.
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