Monday, March 24, 2014

Summary: Energy and NAFTA - Where Do We Go From Here?

By Christian Gómez, Jr.

Canada, Mexico, and the United States have the potential to lower energy prices and increase competitiveness in the region.

Welcoming Remarks:

John F. Prato, Consul General of Canada

Introduction:

Christian Gómez, Jr. , Director, Energy, Council of the Americas

Speakers:

Monica Gattinger, Associate Professor, University of Ottawa
Amos J. Hochstein, Deputy Assistant Secretary for Energy Diplomacy, Bureau of Energy Resources (ENR), U.S. Department of State
David Knapp, Chief Energy Economist, Energy Intelligence Group (Moderator)
Robert Skinner, Executive Fellow, University of Calgary

Summary

On March 18, AS/COA hosted a discussion on energy integration in North America, looking what has been accomplished in terms of energy production since NAFTA came into effect as well as prospects for future cooperation. The speakers agreed that while energy was omitted from NAFTA, the potential for deeper energy cooperation between the three North American countries remained to be fully exploited. Participants said that by working together, the three countries could further integrate their energy markets, leading to lower prices and increased competitiveness in the region.

Shale Gale or Shale Fail? The University of Ottawa’s Monica Gattinger kicked off the discussion with the concept of “shale gale or shale fail.” She argued the shale gas revolution has the potential to enhance regional foreign policy through coordination of efforts, in particular with regards to the United States and Mexico. She explained the need to institutionalize foreign policy mechanisms, stressing the importance of creating an energy bureau for the three countries in order to get the right people at the table when discussing energy policy. Deputy Assistant Secretary for Energy Diplomacy Amos Hochstein spoke about what the shifting balance of energy production and consumption means for geopolitics. Because OECD countries are ceding ground to non-OECD countries in consumption volume, North American energy independence has a potential to draw in new, strategic customers. He also highlighted the U.S.-Mexico Transboundary Hydrocarbons Agreement, which provides a framework for energy development in the maritime border between the United States and Mexico. NAFTA and Energy: Did It Matter? The University of Calgary’s Bob Skinner disagreed with Gattinger and Hochstein about how important energy is for NAFTA. He said that energy was excluded from both NAFTA and the U.S.-Canada Free Trade Agreement that preceded it. According to Skinner, structural changes in North America actually occurred before these two agreements. Due to the Suez Crisis and other factors, U.S. oil demand dropped in the 1970s and early 1980s. The U.S.-Canada accord, in fact, “foreclosed against doing a national energy program in Canada,” said Skinner. Pipelines and Policy Panelists also touched on the Keystone XL pipeline, which is awaiting approval by the U.S. State Department and U.S. President Barack Obama. Speakers noted the pipeline was not the only one connecting Canadian crude to refineries in the United States, with dozens of other pipelines already in operation. In fact, panelists mentioned the viability of East-West pipelines in order to ship oil sands petroleum to Asia at the expense of North American energy integration.

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Summary: Energy and NAFTA - Where Do We Go From Here?

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