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Mexico and the US: Energy Partners?

Mexico is one of the US’s biggest trading partners, all the way around. The two cultures live almost entirely independently of one another (in Mexico, the relationship is characterized sometimes as like “brothers with their backs to each other”), and yet trade, in oil and gas, and in many, many other things is more important to both sides than ever before in history.

It’s not only a trade issue, but sometimes a political issue too. Cooperative geothermal energy projects that straddle the border have been in the works for almost 40 years. And the geothermal electricity is used on both sides of the border, though not everyone knows it. Joint projects in all kind of other renewable energy sources come up and require serious policy consideration – again, on both sides of the border.

Presidents Obama and Calderón signed a little-known (outside the industry) Bilateral Framework on Clean Energy and Climate Change in 2009 with the intent of further developing clean and renewable energy sources and combatting climate change. The framework set goals for strengthening the transnational electricity grid and for further developing green energy in both markets. Some of those projects will also be cooperative. Further taking advantage of oil and gas deposits that lie on or across borders also needs to be done in a way that protects environments again, on both sides.

Cities along the border are driving demand as they are some of the fastest growing in both countries. Both countries are also working to reduce greenhouse gases and to that end, are extending significant loans to both sides to end deforestation and to further develop wind and solar energy. Both the US Department of State and the Interior Department are already advising Mexico on the multiple pipelines now entering the country and on regulating hydraulic fracturing that is producing so much of that lower-cost natural gas that Mexico is buying. Similarly, advances in spill containment now standard in the US are making their way to Mexican offshore wells and rigs.

A 2012 agreement also intends to further cooperation on the development of “transboundary resources.” These have been essentially off limits to both sides as they really do straddle the border, mostly along the continental shelf within the Gulf of Mexico.

In all of these kinds of cases, the meeting of markets is as important as the coalescence of policy agreements and technological standards. Many of the technical standards on both sides of the border are similar, or of parity, but using completely different standards of weights and measures. That’s just the beginning. Smaller American firms are bidding against new, and exploratory Mexican firms, all of them over oil and gas fields being watched by investors and policy makers on both sides. Environmental and technical standards take the front seat to cultural and language barriers that once drove the agenda. In all these cases, you can only expect the field to get more complex, more cooperative and more, yes, even more interesting!

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