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An energy policy that shuns Canadian oil will push America's best ally into the arms of China

Posted: June 7, 2012 - 11:04pm

TUSCALOOSA, Ala. — U.S. energy policies — specifically President Obama’s delay of a decision pending further environmental-impact study for a part of the Keystone Pipeline — are pushing Canada into a closer trading relationship with China.

Just ask Canadian Prime Minister Stephen Harper, who in January of this year told Mr. Obama that the delay meant Canada would focus on “diversifying” energy exports.

Or ask Canadian Natural Resources Minister Joe Oliver, who told the Canadian Broadcasting Corp. that same month that “we currently have one customer (the U.S.) for our energy exports. That customer has said that it doesn’t want to expand at the moment. So it certainly intensifies the broad strategic objective of the government to diversify to Asia.”

Will China want to buy Canadian oil? Absolutely! China’s hunger for petroleum products will continue to grow. Chinese car ownership is still below U.S. levels in 1920. Even if all future car sales in China are hybrids and even if China’s frenetic economic growth slows, as Chinese car ownership rises, the demand for petroleum will soar over the next two decades. And India is also developing a taste for automobiles. If we don’t want Canada’s oil, there are many who do. This is a major mistake for three reasons.

First, domestic oil production is insufficient to meet U.S. needs. According to the Energy Information Administration, oil provides 94 percent of our transportation energy and 37 percent of our total energy. But domestic production met only 45 percent of our 2011 oil needs. Oil also is a key raw material for the U.S. chemical, plastics, and pharmaceutical industries. It is impossible to avoid importing oil.

Our three largest foreign suppliers are Canada (29 percent), Saudi Arabia (14 percent) and Venezuela (11 percent). Of those, only Canada both respects human rights and shares our commitment to democratic government. In short, Canadian oil is what Canadian journalist Ezra Levant terms “ethical oil” — oil that does not undermine our values by funding corrupt and hostile regimes.

Second, buying Canadian oil puts dollars in the hands of one of our best trading partners. In 2009, Canadians invested $261.3 billion here. Canada is the No. 1 export market for 34 U.S. states; $1.6 billion in goods and services cross the U.S.-Canada border daily. By contrast, sending dollars to Saudi Arabia and Venezuela does little for the U.S. economy.

Third, Canada is a reliable energy supplier. With approximately 12 percent of total world reserves, Canada ranks third in the world. And Canadian oil largely comes to us via pipeline, environmentally safer and militarily more secure than ocean transportation.

Why is the Obama administration so set on delaying a decision on a secure source of ethical oil? A crucial financial element in Obama’s re-election strategy is the support of environmentalists such as Hollywood’s Robert Redford and Laurie David.

These activists don’t mind if oil prices go up as they can afford higher gas prices. But they are passionately committed to reducing other Americans’ use of oil and so object to any efforts to tap into Canadian oil.

And — at least until recently — the administration’s top energy policymaker explicitly focused on raising gasoline prices. In 2008 Energy Secretary Steven Chu said his goal was to raise the price of gasoline to European levels — about $8 a gallon. Although Chu has since said he no longer holds that view, the National Journal notes that Chu “seemed to equivocate, pause, and stumble over his words” when backtracking, making his disavowal less than credible.

Canada is one of our oldest allies and best trading partners. “Defriending” Canada on energy is not in our national interest — militarily, economically or environmentally.

• Morriss is a professor at the University of Alabama.

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