Mt. Vernon Register-News

Opinion

January 31, 2014

US needs more energy nationalism, fewer oil exports

(Continued)

Some independent refiners, who want cheap U.S. crude oil since they buy it to refine, have broken with Big Oil to oppose the export agenda. Joining them in opposing exports are steel and aluminum producers; chemical companies; electric utilities; trucking and auto industries; industrial and maritime unions; clean-technology biofuel companies; states in the Northeast, Great Lakes and Pacific West; households that rely on gas heat; and environmentalists worried about the impact of oil and gas extraction from the Canadian tar sands and the Chukchi Sea.

In addition to oil and gas drillers, those favoring exports include multinationals such as Exxon Mobil, the Chamber of Commerce (so much for its defense of all U.S. business), the states of Alaska, North Dakota, Louisiana and Texas, and competitors to U.S. manufacturing overseas.

The divide between these two odd lots concerns more than the price of gasoline at the corner station. Big Oil and its allies envision a future Saudi America that helps OPEC support monopoly oil and gas prices around the world. Opponents of the export strategy veer toward a vision of the U.S. as a middle- class manufacturing power — more like Germany but with lower fuel costs.

The U.S. can see how these competing visions play out simply by looking at its neighbor to the north. What happened in Canada as the global price of oil rose, making its tar sands an attractive investment? Did Canadians benefit?

The province of Alberta gains from tar sands production; the rest of Canada loses, hugely. Canada is a big oil exporter, but gasoline in the Saskatchewan city of Saskatoon, right next to the tar sands, costs almost $5 a gallon — even after you adjust down for Canada's higher gas tax rates.

In 2000, Canada enjoyed a nicely balanced economy with a healthy balance of trade. Energy companies had a $26 billion trade surplus, roughly matching the rest of the Canadian economy. By 2013, the oil industry had more than doubled its surplus, to $63 billion. But the rest of the economy had collapsed, running a trade deficit of more than $70 billion. Canada as a whole was in the red. Huge oil exports drove up the value of the Canadian dollar, making it impossible for manufacturing to compete globally.

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