When President Trump announced he was going to attempt to renegotiate or exit the North American Free Trade Agreement, or NAFTA, it could have only meant two things: the United States was losing manufacturing jobs to Mexico or that trade with Mexico is at our disadvantage. Both are correct.
You see, NAFTA has held the U.S against their will in trade agreements. In 2017, the U.S lost over $71M in trade exports and imports with Mexico. So far this year, we’ve only lost $4.1M, having a $300,000 increase compared to last year, according to the Census Bureau.
The U.S currently has a whopping $56.6B deficit after being taken advantage of from trade agreements such as NAFTA, TPP, and the Paris Climate Accord.
The truth of the matter is that these agreements are detrimental to the U.S economy. They constantly put barriers on our economic social status and what could be an even higher GDP growth. Further, what’s the sole proprietor of NAFTA?
Energy. Since 2008, the U.S and Mexico have been fighting each other for the reigning champion of energy and the production of it. Who’s winning? Let’s put it to the test.
According to the Energy Information Administration (EIA), in 2015-2016, “the value of U.S. energy exports to Mexico, including rapidly growing volumes of both petroleum products and natural gas, exceeded the value of U.S. energy imports from Mexico as volumes of Mexican crude oil sold in the United States continued to decline. For 2016, the value of U.S. energy exports to Mexico was $20.2 billion, while the value of U.S. energy imports from that country was $8.7 billion.”
The U.S is also surpassing 10 million barrels of oil PER DAY, reaching an all time high. Forecasters, however, are saying it won’t last. The United States is expected to give Russia, the world’s top producer of oil, a run for it’s money.
Mexico produces only 3.5M barrels a day.
As for natural gas, “U.S. natural gas exports to Mexico totaled nearly 2.9 billion cubic feet per day (Bcf/d) in 2015, or almost 60% of all U.S. natural gas exports”. Mexico has “daily flows during early 2017 are already exceeding 4.2 Bcf/d.”
Yet in 2017, the U.S exported more natural gas than exported, an average 73.6B cubic feet per day. Those are only to Mexico. As for liquified natural gas, or LNG, it’s exceeding over 90B cubic feet per day.
The value of U.S energy exports to Mexico exceeded import value for the third year in a row. “The value of U.S. energy exports to Mexico increased to a high of $25.8 billion in 2017”, mostly being petroleum exports. “The United States exported 3x as much natural gas to Mexico in 2015 as it did in 2009 at the onset of the shale boom”, EIA statistics indicate.
Last but not least, “In the first eleven months of 2016, the United States exported a total of 1.25 trillion cubic feet to Mexico, a remarkable 31% increase over the same period in 2015.”
Although NAFTA should be terminated, we are dominating the energy sector as far as competition towards neighboring countries go.
Jorge Velasco is the founder and CEO of theDailyLead.