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BACON: Sandy Alberta, the Saudi Arabia next door
Friendly Canada gets ready to replace Yankee-hating oil peddlers
@-Text.rag.dropcap:The Middle East is experiencing one of its periodic convulsions and, as day follows night, tsunamis follow earthquakes and trouble follows Lindsay Lohan, America's chattering classes have renewed talk about "energy independence." America's reliance upon "foreign" oil is said to be undesirable. Why? Because it makes us vulnerable to Arab oil embargoes, anti-American crackpots like Moammar Gadhafi and Hugo Chavez, and madmen bent upon acquiring nuclear weapons and dominating the Persian Gulf oil fields.
There are very good reasons for wanting to extract ourselves from the chaos of the Middle East. But does that really mean we should forsake all "foreign" oil? To the extent that we can avoid buying our petroleum from people who either (a) hate us, or (b) could be taken over next week by people who hate us, energy independence is a good idea. But to the extent that it becomes a justification to squander tens of billions of dollars on white elephants ranging from synfuel facilities (Carter administration) to solar-energy fabrication plants (Obama administration), it's a bad idea.
Permit me to suggest an alternate definition of "energy independence": The United States ceases to purchase oil from parts of the world where supplies can be disrupted by wars, civil strife, regime change or capricious government edict and instead buys it from democratic, peace-loving countries that appreciate the benefits of free markets and abide by the rule of law - in other words, countries like Canada.
Many Americans think most of our foreign oil comes from Saudi Arabia. In fact, more than half comes from the Western Hemisphere: Venezuela, Mexico and Canada. Oil production in the two Latin countries has declined in recent years, but oil output is booming in Canada. Indeed, our friends the Canucks export 2.7 million barrels of petroleum per day, accounting for roughly 30 percent of total U.S. imports.
Yes, our courteous, self-effacing friend to the north has quietly emerged as the No. 1 foreign supplier of oil to the United States. Development of new extractive technologies and $50-plus-per-barrel oil prices have made the vast Athabascan oil sands, located primarily in Alberta, economical to mine. Between conventional oil sources and the oil sands, Canada sits atop 175 billion barrels of oil, the third-largest proven reserves in the world. The Canadian Association of Petroleum Producers forecasts that production will increase to 4.3 million barrels per day by 2025.
As Brian Crowley, managing director of the Ottawa-based MacDonald-Laurier Institute puts it, "Alberta's oil sands constitute a geopolitical fact of global significance." Current reserve estimates are based on the assumption that 10 percent of the oil sands are recoverable, he says. If new technology boosts recovery to 20 percent, he says, that would put "a second Saudi Arabia" on America's doorstep - a Saudi Arabia that doesn't commit human rights abuses, fund radicalizing madrassas or send the United States into a blind panic when a neighboring power threatens to invade.
The Canadians speak of a strategic U.S.-Canadian energy relationship that would foster development of Canadian oil resources for shipment to U.S. markets. The only trouble is, few Americans are listening. The U.S. commentariat discusses non sequiturs like fostering a strategic U.S.-Russian energy partnership, creating "green" wind and solar-energy farms that require massive subsidies or building electric cars that, if the early sales of General Motors' Volt are any indication, nobody wants to buy.
The Canadians are willing to ship us all the oil we want, subject to their ability to expand capacity. There's just one catch: They need a way to get it to us. That means building pipelines such as TransCanada's proposed multibillion-dollar pipeline, which would link Canada to the vast petrochemical refining complex in Houston. What Canadians want is regulatory approval for construction of the pipelines - approval that, given the opposition of the environmental lobby, is far from guaranteed.
As Americans, we need to ask ourselves: Where would we prefer to get our oil? From Saudi Arabia, which manipulates oil prices to extract maximum wealth from American consumers? From Russia, where Vladimir "turn off the tap" Putin uses his control over oil and natural-gas supplies as a strategic political weapon? From Iran, which uses oil revenue to fund development of an atomic bomb? Or from Canada, a country with a democratic market economy, which recycles some of its oil revenues by purchasing American goods and where an influential environmental movement lobbies for appropriate environmental safeguards?
Only in the bizarro world of Washington could the answer fail to be blindingly obvious.
James A. Bacon is author of the book "Boomergeddon" and the blog Boomergeddon.com.
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