February 21, 2018
Interviewed by: Privcap
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The ‘Stunning’ North American Energy Network

RSM’s chief economist discusses how withdrawal from NAFTA could rock the global energy sector. Based on volume 38 of RSM’s The Real Economy report, available for download here.

RSM’s chief economist discusses how withdrawal from NAFTA could rock the global energy sector. Based on volume 38 of RSM’s The Real Economy report, available for download here.

The ‘Stunning’ North American Energy Network

How important to the U.S. economy is the North American energy network established by NAFTA?

Joseph Brusuelas, RSM:
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 have 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.

If the U.S. does not withdraw, you’ll see capital flow from Canada and the United States into Mexico facilitating the modernization of the antiquated Mexican energy infrastructure. This will then facilitate a boom in energy markets and energy companies. You will begin to see the U.S. and Mexico export oil and liquefied natural gas all around the world.

Another thing Americans don’t know [is that] the number one consumer of American oil exports is China. And I’m quite confident that, if we complete this North American energy infrastructure, the number one purchaser of North American liquefied natural gas products will be Europe. Two growing markets, one with a luxury segment and another that’s more of an emerging market. Both [are] actually supporting expansion of American growth and, of course, a booming energy market in which the U.S. and its North American trade partners are poised to dominate for the foreseeable future. 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.

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