The embrace of new technologies to extract oil and natural gas at an unprecedented rate has transformed one of America’s enduring vulnerabilities into a strategic asset. Thanks largely to fracking — hydraulic fracturing of rock — the United States is now the largest producer of oil and gas combined in the world. America consumes large quantities of energy, so this expanded production has not yet made the country energy independent. But it has greatly decreased its dependence on foreign energy: About a decade ago, the United States imported nearly two-thirds of the oil it consumed; that percentage is now closer to one-fifth.
.. an improved trade balance and a stronger economy. The boom has also improved the country’s sources of soft power, in part by underscoring America’s enduring edge in innovation and ingenuity.
.. American producers of oil from shale rock have introduced a new business model to the scene: Small investments in exploration and production can bring oil to the market quickly. This weakens OPEC, by making it more difficult for its production cuts to result in sustained increases in oil prices. For the first time in more than a century, the market determines the price of oil with much less influence from any cartel, commission or band of big oil companies.
.. The energy boom has also weakened many of America’s competitors, particularly Russia, by both decreasing its revenues and reducing its ability to use its energy resources as a political cudgel.
.. The boom also expands opportunities for the United States to forge new partnerships. For instance, given China’s growing dependence, and America’s waning reliance, on Middle Eastern oil, Beijing may be more likely to work with the United States to stabilize that part of the world. Such changes put America in a stronger position to reinforce the international order.
.. Many non-energy policies of the Trump administration undermine the energy boom and all its potential advantages.
.. On climate, Mr. Trump’s pledge to withdraw the United States from the Paris agreement could also hurt the American energy boom. Natural gas stands to gain as the world takes strides to tackle climate change: As countries transition to more sustainable energy, they often move away from coal to natural gas. American natural gas exports could benefit from this transition — but not if countries like China and India also weaken their commitment to tackling climate change and drag their heels in curbing coal consumption.
.. Mr. Trump’s talk of retrenchment overseas has made friends and foes nervous about America’s willingness to continue to use its vast sea power to maintain open shipping lanes. Over half of the world’s oil supply and a growing percentage of the natural gas it consumes is transported through these waterways.
.. Mexico is by far the largest foreign consumer of American natural gas — a trend that will increase with recent Mexican electricity reforms. Yet President Trump’s talk about a border wall has spurred a revival in the presidential candidacy of Mexico’s own populist, Andrés Manuel López Obrador, who is committed to reversing these and other energy reforms. That would not only shrink the largest market for American natural gas but would also dull prospects of the United States, Canada and Mexico of reaching North American energy independence.
Mexico Plays the ‘China Card’
The possibility President Trump will pull out of NAFTA has prompted his Mexican counterpart to court China.
.. This week, while his country is renegotiating the North American Free Trade Agreement, Mexican President Enrique Peña Nieto was in China to pursue his country’s Plan B. Rumblings of a free-trade deal between the two nations have grown since President Trump took office this year, but they’ve mostly been seen as political posturing. But with Trump threatening regularly to dump the deal—even taking time last Sunday, during Hurricane Harvey, to say he “may have to terminate” NAFTA—the possibility of Mexico opening up to China seems ever more real.
.. Peña Nieto’s will participate in the BRICS summit in China, named for its participants, Brazil, Russia, India, China, and South Africa. And he also met with Chinese President Xi Jinping, a sign the two countries are seeking a closer trading relationship.
.. NAFTA changed the waythe U.S. eats, and without NAFTA, consumers stand to lose their perennially fresh and cheap vegetables. But the sector that stand to lose the most is auto manufacturing, because U.S. companies have invested heavily on being able to send car parts to Mexico, assemble them there, then bring them to the U.S. to be sold.
..The WTO tariffs for the auto sector are much higher than for most other industries, so not only would consumers have to pay more for cars, but it would likely disrupt the current chain of manufacturing.
.. if NAFTA did end, it’s trade would likely continue at WTO tariff rates, making many products from Mexico more expensive, but leaving intact the flow of trade.
..Mexico sends about 75 percent of its exports to the U.S., which comes to about $290 billion. By way of comparison, Canada is its second-largest export market at $23 billion, and China its third at $7 billion...And as recently as June, China’s ambassador to Mexico, Qiu Xiaoqi, said his country was open to a free-trade agreement. But while a deal like that could benefit China (and scare the U.S.), it probably wouldn’t benefit Mexico that much. Dussel told me Mexico imports about 14 Chinese products for every one product it exports... “The thing you want to think about is what is Mexico’s competitive advantage,” Adam Collins, a Latin America economist with Capital Economics, a London-based research and consultancy group, told me. “In both cases it’s low wages. So really the place Mexico should look to are other developed countries, like in Europe, and richer East Asian countries. But even that is an uphill battle because of geography, by which I mean Mexico’s other competitive advantage is its location next to America.”
North Korean Nuclear Test Draws U.S. Warning of ‘Massive Military Response’
The underground blast was by far North Korea’s most powerful ever. Though it was far from clear that the North had set off a hydrogen bomb, as it claimed, the explosion caused tremors that were felt in South Korea and China. Experts estimated that the blast was four to sixteen times more powerful than any the North had set off before, with far more destructive power than the bombs dropped on the Japanese cities of Hiroshima and Nagasaki during World War II.
.. Mr. Trump hinted at one extreme option: In a Twitter post just before he met his generals, he said that “the United States is considering, in addition to other options, stopping all trade with any country doing business with North Korea.’’
.. Taken literally, such a policy would be tantamount to demanding a stoppage of any Chinese oil to North Korea, essentially an attempt to freeze out the country this winter and bring whatever industry it has to a halt.
.. The Chinese would almost certainly balk; they have never been willing to take steps that might lead to the collapse of the North Korean regime, no matter how dangerous its behavior, for fear that South Korean and American troops would occupy the country and move directly to the Chinese border.
.. Beyond that, the economic disruption of ending all trade with China would be so huge inside the United States that Mr. Trump’s aides declined on Sunday to discuss the implications.
.. “We are not looking to the total annihilation of a country, namely North Korea,” he said. “But as I said, we have many options to do so.”
.. The North has shown no interest in engaging with the United States unless the Americans end their military presence in the South.
.. the North Korean leader has tried to portray his nuclear program as unstoppable and nonnegotiable
.. “North Korea is a rogue nation which has become a great threat and embarrassment to China, which is trying to help but with little success,” he said. “South Korea is finding, as I have told them, that their talk of appeasement with North Korea will not work, they only understand one thing!”
.. Mr. Trump’s undisguised swipe at the South for “appeasement” was certain to exacerbate fears that the United States might put it in danger. And it came only a day after Mr. Trump threatened a new rift in relations with suggestions that the United States might withdraw from a trade deal with South Korea — one that was intended to bolster the alliance.
.. The test’s timing was a major embarrassment for President Xi Jinping of China, who on Sunday was hosting a summit meeting of the so-called BRICS countries — Brazil, Russia, India, China and South Africa.
.. the test seemed intended to jolt Mr. Xi and convince him that he needed to persuade the United States to talk to North Korea.
.. The timing of the test on Sunday was almost certainly no coincidence: It came during the American Labor Day weekend, and the anniversary of the founding of the North Korean government is next Saturday.
In the coming days, the government is expected to organize huge rallies to celebrate the bomb test and Mr. Kim’s leadership.
.. “Pyongyang has a playbook of strategic provocations, throws off its adversaries through graduated escalation, and seeks maximum political impact by conducting weapons tests on major holidays,”
.. experts have said that the North may have tested a “boosted” atomic bomb that used tritium,
The Economist Exclusive — The Future of Bannonism: ‘The Judeo-Christian Liberal West Won’
A zealous Catholic who believes in the inevitability of civilisational conflict, he considers China’s growth to be an additional, overarching threat to America, which it must therefore dial back. “I want the world to look back in 100 years and say, their mercantilist, Confucian system lost. The Judeo-Christian liberal West won.”