North America is emerging as a virtual supply center of the international energy market, a development that has implications for the economic and geopolitical stature of the entire continent.
With the recent approval of Mexico's energy reform and the current enthusiasm of South American governments to attract foreign investment in oil, one might be tempted to conclude that the tide of resource nationalism is receding in the region. Nevertheless, the cycles of investment and expropriation that have characterized the oil sector in Latin America are unlikely to go away.
Mexico must address two key questions in order to realize the promise of greater employment opportunities: Does the country’s current workforce have the needed skills to adequately respond to increases in production, and is the country allocating the necessary resources to respond to the demand for future skills? This issue brief focuses on education's role in reducing the workforce skills gap that Mexico will face as the energy sector expands.
Academic mobility is critical for robust collaborations in education, research and innovation between the U.S. and Mexico. Governments in both countries, in cooperation with nongovernmental actors, should provide a framework to develop mechanisms that generate and sustain a meaningful exchange of students, faculty, and staff from educational institutions at all levels of post-secondary education.
Under proposed legislation to implement Mexico’s energy reforms, Pemex will remain a privileged state operator supporting exploration and production in most of the country's proven onshore and shallow water fields. It is not known if energy reform will effectively turn Pemex into a firm able to compete without policy bias against private investors.
Governance of the natural gas sector in Argentina is at an incipient stage. The oil and gas sector developed under a centralized management structure in which a relatively insulated government imposed policy on the sector. That structure is well-developed, even if unstable and characterized by lack of credibility. The traditional unilateral government control of the sector is not appropriate for creating a favorable investment climate for the high-cost, high-risk investments required in shale gas or for managing the protests by civil society actors that have erupted against fracking. But the creation of governance as a replacement for government control is only beginning and faces many obstacles to its full development. The evolution of governance will have a major impact on the development of the country's shale gas resources. Consequently, the full development of Argentina's shale gas potential is problematic.
Talk of a “pivot to Asia” that supposedly would mark President Obama’s second term is “misplaced and even simplistic,” writes fellow Kristian Coates Ulrichsen. In a globalized world, “key U.S. relationships with strategic and commercial partners … cannot be addressed in isolation from one another. The convergence of U.S. ties and Asian ties with the Middle East is a case in point highlights how regions and issues are interconnected as never before.”
Mexico's organized crime groups have expanded into areas that include the theft of crude oil, gas and gasoline. The impact of organized crime on the energy sector is a real threat to the intended effects of Mexico's energy reforms.
Kenneth B. Medlock III, James A. Baker, III, and Susan G. Baker Fellow in Energy and Resource Economics, testified about crude oil production and energy trade policy before the Committee on Foreign Affairs of the U.S. House of Representatives.
