The power of the North American energy industry is that it transcends borders, and while it was interconnected way before NAFTA, it is becoming even more so.
The ties are deep rooted. In the early 1900s, primitive power lines sent electricity crackling across the border between Texas and Mexico. Canada has long provided the U.S. hydroelectric power, and all three countries now send oil, refined fuels and natural gas back and forth across the northern and southern U.S. borders on a daily basis.
With trade the hot topic in Washington and now for all three members of NAFTA, the fallout from the renegotiation of the North America Free Trade Agreement and the U.S. proposals about taxing goods at the border can't help but be an important topic when the global energy industry meets in Houston this week.
In fact, Canadian Prime Minister Justin Trudeau will deliver a keynote address on Thursday, which he tweeted would be about innovation and renewable energy. CERAWeek by IHS Markit runs Monday through Friday and participants include energy ministers from Russia and Saudi Arabia, as well as CEOs from major oil companies, like Exxon Mobil, BP, Chevron and Total.
"I expect to hear a great deal at CERAWeek from Prime Minister Trudeau and industry leaders about the importance and mutual benefit from the large cross-border energy [integration]. Whatever the eventual outcome of the NAFTA debate, they're not going to want to lose benefits," said Daniel Yergin, vice chairman of IHS.
The Trump administration promises to be a strong supporter of energy, removing regulatory hurdles for the industry and encouraging more U.S. drilling. Just last week former Texas Gov. Rick Perry was approved to be Energy Secretary. Perry has spoken positively about North American integration in the past, and until recently he was on the board of Energy Transfer Partners, which is building pipelines to take natural gas to Mexico.
But the administration has also been critical of Mexico for what it claims are unfair trade practices and weak immigration controls.
So even though the industry is intertwined, the future course for North American energy is murky.
Guaranteed to be discussed at CERAWeek is the proposal from House Republicans to tax imports into the United States at a rate of 20 percent. The so-called border-adjustment tax is a major revenue generator for the House corporate tax reform plan. It is bound to generate as much debate in the energy industry gathering as it has in other affected industries, such as retail.