By James Marks
September 9, 2019 at 5:55 am ET
Last month, Speaker of the House Nancy Pelosi visited Honduras with a congressional delegation to “explore the causes of immigration and possible solutions.” Pelosi’s examination of the reasons behind the influx of immigrants arriving at our borders is an important step toward finding a viable answer to this growing crisis.
One such answer that should be considered by Congress and President Donald Trump is an energy marriage between the United States and Honduras that would be mutually beneficial – advancing both Honduran stability and American national security while addressing migration concerns.
Honduras is a country lacking sufficient energy infrastructure, resulting in poor availability and reliability. There are undoubtedly humanitarian gains to be made through a happy matrimony between the Honduran and U.S. energy sectors.
Currently, the Honduran government is responsible for all energy operations and has struggled to deliver to its citizens. In 2017 over 10 percent, or roughly 2 million people, were without access to electricity, particularly in the rural areas of the country. Quality of life and opportunities to improve in a modern world suffer without the availability of electricity.
The state of the energy sector in Honduras makes little sense. As of 2016, Honduras imported more primary energy from China, thousands of miles away, than from the United States by roughly 25 percent. Notably, its energy imports rely heavily on oil, and it did not import any natural gas in 2016.
Unfortunately, for its citizens, there are no signs that point to any immediate improvements the country can make to turn around the energy sector, clearly a factor for many to leave in search of better living conditions in the United States.
In the 1990s, Honduras’ energy sector was nationalized under the Empresa Nacional de Energía Eléctrica, which created a single-buyer market environment. The World Bank’s Energy Sector Management Assistance Program reported in 2010 that ENEE has been incurring annual financial losses nearing 2 percent of Honduras’ gross domestic product.
ESMAP pinpoints system losses, generation costs and volatile oil prices as contributing factors to the organization’s struggles, concluding that “… Honduras could face a severe energy crisis.” I suggest the tipping point of that predicted crisis has been reached.
As a global energy leader, the United States is perfectly positioned to help Honduras get ahead of this crisis by pursuing private investment there from energy companies. In particular, the natural gas sector is experiencing a boon from which Honduras and its citizens can benefit.
The latest data published by the U.S. Energy Information Administration indicates that the price of U.S. natural gas exports has decreased 54.66 percent since 2008, down to roughly $4 per thousand cubic feet. Furthermore, energy analysts expect American natural gas inventories to swell by 61 billion cubic feet through August. These inventories could trigger additional decreases in prices.
In April, Trump signed two executive orders aimed at easing the processes for energy companies to pursue building infrastructure projects that will, in the president’s words, “unleash American energy.” These orders were quickly followed by approvals from the Federal Energy Regulatory Commission for two new liquefied natural gas terminals in Texas and Louisiana, each hotbeds of natural gas production.
By seeking out the Honduran market, energy infrastructure companies will create significant commerce opportunities as indicated by a strong uptick of nearly 10 percent in LNG demand globally, according to Reuters. With the United States set to become a net energy exporter by 2020, there are opportunities in Honduras to bolster our national security and international relations posture.
A core foundation of national security is the well-being of Americans. Increased revenue from large-scale projects – required to tap into Honduras – would put new income in the pockets of Americans. A second wave of income and tax revenues would follow these projects as exports and long-term trade relationships grew. These revenues could be deployed in a number of ways, be it defense or infrastructure spending. Either offers benefits to national security.
Honduras would greatly benefit from the increased availability of natural gas and U.S. investment in its energy infrastructure. The ENEE struggled to withstand energy price fluctuations, but a steady and reliable connection to U.S. energy through pipeline infrastructure and corresponding import terminals could protect the country from the whims of the global market. This benefits Honduras and the United States by squeezing out price-gouging competitors like China and the Organization of the Petroleum Exporting Countries.
Significantly, more reliable and available energy in Honduras will also lead to improved living conditions and increased economic opportunities for its citizens, resulting in less migration north.
As solutions to the current immigration crisis are being debated on Capitol Hill and the campaign trail, let’s embrace one that capitalizes on our energy renaissance and lends a helping hand, not a stiff arm, to our Central American neighbors.
James “Spider” Marks is a retired U.S. Army major general and strategic adviser to the GAIN Coalition.
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