Liquefied Natural Gas in North America: An Analysis of the United States’ Exportation Position in the Context of its North American Free Trade Agreement Partners
Liquefied natural gas is quickly emerging as a dominant player in the global energy trade. As more and more production terminals are built, the potential for its use in replacing more harmful fossil fuels grows. It has not only been touted as an important step in the stalling of global climate change, but also as a viable energy source for developing economies in Asia and Africa. Increasing production could effectively reduce the need for coal as an energy source in several regions of the world. The United States is at the forefront of the trade in this cryogenically stored fuel, but there are restrictions to the material’s economic prosperity. The U.S. imposes limits on those countries with which it can trade liquefied natural gas, and requires permitting and petitioning to allow countries that do not meet their requirements to receive LNG shipments. Still, the United States is in a better position than its counterparts to the north and south when it comes to the export of LNG. Its comparative advantage rests in high volumes of surplus, a well-established infrastructure and a fairly compliant regulation system. However, with continental, cross-border trading flows dictating the crux of LNG trade for the three North American partners, freezing each other out may result in severe harm to U.S. export markets. The North American Free Trade Agreement (NAFTA), which has been in effect for more than 20 years, has come under fire. A main trade policy of the Trump Administration has been to renegotiate the trilateral deal so that it better benefits Americans. For the past several months, the trade ministers from Canada, the United States and Mexico have sat down to draft a new agreement, but the United States has stated it will walk away from the table if its demands are not met. This could spell disaster for the U.S., which would no longer be able to send gas to its primary importer, Mexico. The United States has the possibility to expand its market, exporting gas to Europe, Latin America and Southeast Asia. Unfortunately, American regulatory statutes stand in the way of the promotion of better opportunities for energy trade. The U.S. should look to reduce these regulations not only to benefit the economy, but to act as a failsafe should negotiations fall through
Liquefied Natural Gas in North America: An Analysis of the United States’ Exportation Position in the Context of its North American Free Trade Agreement Partners.
Undergraduate Review, 14, 45-57.
Available at: https://vc.bridgew.edu/undergrad_rev/vol14/iss2/9
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