The U.S. energy revolution has passed a milestone, if new data is correct. By the end of August, federal projections indicate, America will become a net exporter of natural gas, and remain so well into the future.
In every month of 2018, American natural gas producers will post a large and growing export surplus. As LNG terminals are built, the nation's capacity to export liquefied natural gas is expected to triple by 2019, to more than 9 billion cubic feet a day.
But the biggest game in gas exports is much closer to home, in the form of exports to Mexico by pipeline. As the Washington Examiner reported Monday, more than half of Mexican energy imports and nearly 60 percent of its natural gas imports now come from the U.S., up from 22 percent in 2010.
This May, Mexico bought 129 billion cubic feet of American gas, more than four times what it purchased in May 2014. With Mexico's economy growing and its demand for natural gas skyrocketing, this trade is sure to get much bigger and become a source of great wealth and many well-paid jobs in the U.S. That's without even mentioning the growing oil and other petroleum products we're now exporting to Mexico as well.
This is all good news, but there's a catch, or at least the threat of one. On Wednesday, President Trump officially ran out the 30-day waiting period after which he can begin his long-promised renegotiation of the North American Free Trade Agreement. Trump has famously disparaged that pact as one of the worst trade deals in history, claiming that it gives Mexico a massive advantage at Americans' expense.
But America's new standing as an energy-exporting powerhouse should change the way Trump and others think about NAFTA. It is imperative that the trade deal survive in some form so that it keeps serving and encouraging this fast-growing segment of our economy.
Aside from its geographic proximity, NAFTA is a big reason Mexico buys more than half the gas that America exports. Outside of NAFTA, natural gas exports would be subject to a bureaucratic approval process, and many environmentalist and business interests would like to keep it that way. The Department of Energy must decide in each case that the export is in the national interest.
Although the danger of a trade war and even a gas cutoff is always there in a post-NAFTA world (especially if Mexico elects a hostile president next year), that's less likely than the erection of barriers that will crush American exports more slowly. It isn't hard to imagine the election of a U.S. president who will decide exports of fossil fuels are bad for the national interest, either from a misguided radical environmental agenda or fealty to business interests that consume a lot of gas and want to prevent exports so they can keep domestic prices down. The latter groups make a self-serving argument against export permits and permits to build liquid natural gas infrastructure.
Free-trade agreements are intended to help people on both sides of a border do business with each other, with little government interference. Deals break down tariffs and regulations put in place to appease domestic lobbies that want to make exports more difficult.
Even if Trump is determined to change NAFTA, he has to make sure that the result is a better deal for American businesses that are creating jobs by exporting to Mexico. As the U.S. becomes a world energy juggernaut, this is a very good week for the president to remember that trade deals are not just about jobs that disappeared decades ago, but also about the ones that will be created in decades to come.