Mexican Trucks and Canadian Pipes

I've decided to do a policy post regarding current controversies over the Keystone XL oil pipeline from Canada and the opening of our borders to Mexican trucks. Since these are international issues, I suppose I'm taking a more macro approach to supply chain logistics.

The Keystone XL Pipeline is a relatively new issue in the United States media but allow me to fill you in. In essence it is a pipeline that will carry Canadian crude oil from the Athabasca Oil Sands in Alberta to various areas in the United States. A map is found here. The proposed extensions in yellow are two different phases. This is where the controversy lies. There are questions over the necessity of such a pipeline and the environmental impacts(carbon, water, etc.) There is dissension from other OPEC nations like Nigeria and Venezuela. As we have learned in class, pipelines carry large fixed costs. There is steadily increasing demand from BRIC that is outstripping supply. Prices rise. I feel it is a worthwhile endeavor. If you put your policy caps on for a moment, what do you think? Are the potential environmental impacts enough to outweigh an improvement in our energy supply network?

The Mexican Trucking program has its roots in the North American Free Trade Agreement (NAFTA) of 1993. Part of the original agreement was a provision that allowed for Mexican trucks to travel to any destination in the United States and then back to Mexico. After 15+ years of retaliatory tariffs, political wrangling, and environmental challenges, a pilot program was started this October. I believe this will help the logistical issues on the HUGE 3,169 km (1,969 mi) border. The Mexican trucks that are not part of the pilot have to unload their merchandise at warehouses near the border for US truckers to pick up. An article relating to this issue quotes a Senior Fellow at the Petersen Institute for International Economics on the extra costs this entails:

"It's probably 3, 4, 5 percent. It depends on the kind of product you're shipping."

Talk about inefficient. The Laredo, TX border crossing alone handles 40% of merchandise by volume and 50% by value that are coming into the United States. This is according to a study of the International Journal of Transport Economics. The Nogales, NM crossing handles 2/3's of the winter produce coming into the United States in Canada during winter. These are critical nodes in our macro supply chain. Anyway to logistically streamline the transport of goods across the border is a welcoming change IMO. Slide 19 in the Week 5 slide deck shows how dire things are. We are rapidly approaching gridlock. Not all is good however. With the increasing border violence spilling over into the US, the illegal drug trade, and illegal immigration people are right to be concerned. There are legitimate security and economic risks. Again, I ask you to put on your policy caps. Do you see this as a step forward or does it invite more risks to the international supply chain between two nations?