How Might North American Oil and Gas Markets Have Performed with a Free Trade Agreement in 1970?

Deregulation on both sides of the U.S.-Canadian border has made certain aspects of trade agreements largely superfluous in the near term. It is over the longer term that the impact of the NAFTA will become apparent. To grapple with this issue, simulations are attempted of oil and gas trade between t...

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Bibliographic Details
Published in:The Energy journal (Cambridge, Mass.) Mass.), 1993-07, Vol.14 (3), p.119-152
Main Authors: Watkins, G. Campbell, Waverman, Leonard
Format: Article
Language:English
Subjects:
Crude oil
Deregulation
Domestic prices
Energy industry
Exports
Fossil fuels
Free trade
Gas industry
Impacts
Imports
International trade
Market prices
Natural gas
North American Free Trade Agreement
Oil prices
Petroleum industry
Studies
Supply
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Summary:Deregulation on both sides of the U.S.-Canadian border has made certain aspects of trade agreements largely superfluous in the near term. It is over the longer term that the impact of the NAFTA will become apparent. To grapple with this issue, simulations are attempted of oil and gas trade between the United States and Canada as if the NAFTA had been in place before the first oil price shock of 1973. The simulations suggest substantial additional exports of Canadian oil and gas would have enabled the United States to back out volumes of OPEC oil during the critical years of the late 1970s and early 1980s.This would have served to dampen world oil markets during the years of OPEC ascendency—not dramatically, but not negligibly either. By promoting closer integration of energy markets, the NAFTA should lead to more cohesive North American responses to any future world oil shocks.
ISSN:0195-6574
1944-9089
DOI:10.5547/ISSN0195-6574-EJ-Vol14-No3-6