While coming from opposite ends of the political spectrum, the administrations of US President Donald Trump and Mexico’s recently elected chief executive, Andrés Manuel López Obrador (commonly referred to as “AMLO”), have each heralded significant policy shifts with potential to affect bilateral relations as well as international energy markets.
The Trump administration’s trade and immigration policies have attracted significant attention, but the current US administration’s environmental policy shifts also pose the potential for significant impacts on global markets, particularly in the energy sector. Under the Obama administration, for example, the executive branch often opposed or heavily restricted energy projects on the basis of environmental concerns ranging from alleged impacts of unconventional oil and gas production (e.g., hydraulic fracturing, or “fracking”) to asserted climate impacts of fossil fuel combustion for electric power generation—both domestically and in overseas markets, such as China.
By contrast, the Trump administration has taken steps to scale back regulation of methane emissions from upstream oil and gas production and to expedite approvals of pipelines and LNG export terminals, including projects focused on natural gas export to Mexico and Asia. Thus while many Trump administration policies may have engendered uncertainty on the international front, some of its policies may provide greater stability for energy market participants, at least in the cases of Asia and Mexico.
Recent policy shifts in Mexico are equally dramatic, posing the potential for significant ripple effects on international energy markets given the nation’s strategic position as a major energy consumer, producer and (potentially) exporter. But the outcomes of these policy shifts are challenging to predict due to their recent nature and, at least in significant part, uncertainties introduced by Mexico’s new administration.