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U.S. energy sector eager for Mexican trade specifics

Canada, the largest oil exporter to the United States, was not included in a bilateral trade announcement from President Trump.

By
Daniel J. Graeber
Representatives from the U.S. energy sector wonder about their position in a U.S. trade arrangement with Mexico that centers on the automotive industry. File Photo by Brian Kersey/UPI
Representatives from the U.S. energy sector wonder about their position in a U.S. trade arrangement with Mexico that centers on the automotive industry. File Photo by Brian Kersey/UPI | License Photo

Aug. 28 (UPI) -- Industry groups representing the energy sector were upbeat about improved U.S. trade relations with Mexico, but expressed concern about the lack of detail.

Calling it the "United States-Mexico Trade Agreement," U.S. President Donald Trump on Monday announced the completion of a preliminary trade agreement that centered on auto manufacturing, labor standards, agricultural trade and intellectual property and digital trade.

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With cross-border pipelines sending U.S. natural gas to Mexico, American Petroleum Institute President and CEO Mike Sommers said he was encouraged by the step forward on trade.

"America's natural gas and oil industry depends on trade to continue to grow U.S. jobs and our economy, and deliver for consumers," he said in a statement.

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Expansions to U.S. natural gas pipelines to Mexico have led to an overall increase in exports. Last year, the United States averaged about 4.2 billion cubic feet per day in gas exports to Mexico. In the first five months of this year, that average was closer to 4.4 billion cubic feet per day.

That gas, meanwhile, is displacing imports of liquefied natural gas into the Mexican economy, but piped gas from the United States has its own complications. U.S. tariffs on imported steel create problems for the energy sector because of the increase in costs to build new infrastructure.

At least four new pipelines in Mexico's five-year natural gas infrastructure expansion plan are scheduled to begin commercial operations by the end of the year.

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In a statement emailed to UPI, Ed Longanecker, the president of the Texas Independent Producers & Royalty Owners Association, said the industry was looking forward to modernized trade relations in North America, but wanted more details on how it relates to the energy sector.

"We look forward to learning more specifics of the new trade arrangement reached between the United States and Mexico as it will relate to the energy sector, particularly given the large volume of oil and gas resources supplied daily to Mexico by our country," he said.

The plan calls for a least 75 percent of an automobile's value to be made in North America, up from 62.5 percent previously, to qualify for zero tariffs. Use of more regional steel, aluminum and auto parts will be required, and a certain proportion of the vehicle must be made by workers earning at least $16 per hour.

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Any revision to North American Free Trade Agreement requires congressional approval. Canada, the largest oil exporter to the United States, was not included in Trump's bilateral trade announcement.

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