US MX energy brief

Created Tuesday 19 November 2024

Summary

both favour US strategic goals, though green energy is against Trump's allied fractions of capitalism (fossil fuel industry)

Trump will cut green energy and push for LNG expansion
Mexico will increase as importer of US LNG
Mexico is also increasing energy infrastructure between North America and Latam
- US global energy market integration a critical goal of US foreign policy
But geopolitics over China, rule of law and near-shoring in Mexico suggest that USMCA renegotiation will be difficult, especially when the security themes of immigration and drug war are in the mix.
But, a lot of these Trump policies could fail, drive up inflation and hurt US industry.
Mx has leverage, especially if it bends to Washington's will over immigration and the drug war.
- AMLO did, and Trump and Biden both left Mexico alone.

Links

Us/Mx energy trade 2023 (graph)
- exports to Mx
  - natural gas
  - refined oil products
- imports from Mx
  - Mx crude for processing
Trump policy
- Roll-back green energy & Expand LNG production/ exports (graph), shale not as important
  - reverse Biden pause on US LNG (here), and reverse regulation on fossil fuel sector (Brookings article)
  - US will prob focus on LNG exports to Mx
    - future LNG development Mx (data and here)
  - TC Energy (Canada) head sees good times (article)
- Marco Rubio (proposed head of State department) position on Mx
  - limit Chinese near-shoring to Mx
  - Security - (Trade, energy, Narcos & immigration all linked)
    - Immigration is the key here (AMLO did what Trump asked, and US left Mx alone, inc. under Biden)
    - Drug War is also imp
      - it must continue to ensure connected energy markets are protected against anti-capitalist Resistance (to protect liberal markets)
    - USMCA reform
      - Rule of Law in Mexico in doubt (Vulcan - see FT article)
      - stop Chinese linked near-shoring (Foreign Policy)
      - IMP Trump version 2 is not as anti-China as his discourse first time was. Trump signed a trade deal w/ China last time, and does not support taiwan like BIden does - Curt Mills https://www.theamericanconservative.com/what-a-trump-cabinet-might-look-like/)

Problems Issue with Trump policy
- Forbes article on the topic
  - tariffs will impact domestic supply chains, raise costs, hinder development and create inflation
    - Nationalist or protectionist policies that jeopardize the (relatively) free movement of capital, goods and services impede investment and raise costs.
- Mx tariffs: if Mx energy use drops due to less industrial activity, LNG exports will also drop.
- restricting immigration drives up inflation in US

Mexico position

Pro-US energy market integration in Latam
- Promoting green transition
  - cheaper than fossil fuel development - McKinsey report 2019
  - logical progression for Latam
- infrastructure expansion
  - Council on Foreign Relations Mx specialist (articel)
- building more gas plants to process US LNG
- exports crude to US due to poor refining infrastructure
- Mx crude production has levelled out since 2018 (graph)
- near-shoring (helps create supply chains w/ US & (needs FDI & energy))

Anti-US energy market integration in Latam
- (Chinese linked) near-shoring
- Rule of law
  - gov centralising and nationalising resource management,threatens US capital.

Backlinks: Bullet Journal:Daily log:11 Nov:wk 04:11.19.tu