The job-creating, economy-boosting resurgence in U.S. natural gas and oil production shows no signs of slowing down.
The latest projections from the U.S. Energy Information Administration show domestic oil production is expected to reach a new high of 10.6 million barrels per day this year, on its way to nearly 12 million barrels per day by 2040. The United States is projected to become a net exporter of oil and natural gas combined by 2023.
The positive impact of American energy abundance is wide-ranging. As The New York Times reports: “The results go far beyond the economic, offering Washington strategic weapons once unthinkable. The United States and its allies now have a supply cushion at a time when political turmoil in Venezuela, Libya and Nigeria is threatening to interrupt flows to markets.”
Overseas disruptions once sent gasoline prices soaring, but that supply cushion provides what we call energy security. And our energy trade with Canada and Mexico further strengthens that security.
Trade partnerships supported by the North American Free Trade Agreement (NAFTA) provide for a stable source of energy to supplement our own strong production.
As the world’s leading natural gas and oil producer, we’re importing less and less. And the more of that “less and less” we can source from reliable neighbors in our own continental backyard, the greater our energy security. In fact, projections show North America could be self-sufficient in terms of liquid fuels as soon as 2020.
Just as important are the economic benefits generated by our energy exports to Canada and Mexico — among our top energy customers.
Canada is both our No. 1 source of crude oil imports and the No. 1 market for our crude exports. Mexico is our largest outlet for natural gas exports and the No. 1 export market for U.S. finished motor gasoline, accounting for 52 percent of all U.S. gasoline exports.
The United States sold more than 660 million barrels of crude oil and refined products to Canada and Mexico in 2016. Across a host of energy product categories — from jet fuel to natural gas — Mexico and Canada consistently rank as our top two export markets.
Under NAFTA’s important zero tariff and market access policies, U.S. energy resources flow to our neighbors, and profits flow back — generating jobs and growth not just in the energy production sector but in related industries like infrastructure construction and businesses throughout the supply chain.
As negotiators from all three nations work together to modernize NAFTA, maintaining provisions that ensure strong energy trade should be a priority. One of those provisions is investor-state dispute settlement (ISDS), which provides important protections against unfair practices, not just for energy trade but for a variety of U.S. industries.
Trade with Canada and Mexico supports 14 million U.S. jobs, according to the U.S. Chamber of Commerce, and investments made directly within Canada and Mexico make it easier for U.S. businesses to access resources and secure market access for U.S. products — whether energy products or manufactured goods.
ISDS ensures that those investments are protected — providing U.S. businesses operating across the border a level playing field with local competitors and guaranteeing the same property and due process protections found in the U.S. Constitution.
If ISDS is watered down or falls through the cracks, it opens the door for other nations to withdraw similar agreements safeguarding U.S. investments around the globe.
Modernizing NAFTA is a complex challenge. But the facts are pretty straightforward when it comes to energy. As negotiators work toward agreement, maintaining policies that help keep energy affordable and secure for U.S. consumers will ensure a revamped NAFTA is on the right track.
Jack N. Gerard is president and CEO of the American Petroleum Institute, the national trade association that represents all aspects of America’s oil and natural gas industry. Readers may write him at API, 1220 L Street, NW, Washington, DC 20045-4070.