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Predicted U.S. oil boom no threat to Canada
There is more for Canada to celebrate than bemoan in the U.S. oil boom highlighted by the International Energy Agency’s latest World Energy Outlook. The boom will provide a welcome boost to the economy of our most important trading partner. It will also provide benefits to our service industry. If there is any threat to Canadian exports to the U.S., it comes not from increased U.S. production but the policies of President Obama.
According to the IEA, U.S. oil output is set to surpass that of Saudi Arabia by the early 2020s. “[O]ne remarkable feature of the market, to which we draw attention this year,” declares the report, “is an energy transformation in the United States. Due to a combination of new technology, free markets and policy action, the United States is well on the way to becoming self-sufficient in energy, in net terms.” But it’s only remarkable if you don’t believe in free markets or human ingenuity. You won’t find the words “free market” anywhere else in this 690-page digital doorstop.
While U.S. oil production is projected to grow, the U.S. will continue to be a major oil importer. Canada, after all, is more than self-sufficient in oil but still imports, mainly to Eastern markets. The U.S. boom in North Dakota is certainly having an impact on Canadian export revenues, but that is because of a bottleneck at Cushing, Okla., which is being addressed by new pipelines to the Gulf Coast.
Otherwise, the IEA report contains a bucketload of irony and embarrassment both for President Obama and the kind of wonky thinking that pervades the IEA. The IEA’s reference to the contribution of “policy action” to the boom is almost satirical. Despite his Damascene “all of the above” conversion in this election year, President Obama is the most anti-oil president ever. Didn’t he once decry petroleum as a “19th-century resource?” And wasn’t the IEA warning just a few years ago about the U.S.’s excessive reliance on the Middle East?
Media crusaders and politicians such as New York’s Mayor Micheal Bloomberg can claim all they want that Hurricane Sandy is the shape of things to come, but the world ploughs on using fossil fuels regardless. During the past decade, in which coal has been damned and demonized, it has met nearly half of the rise in global energy demand. It is projected to be the main fuel of electricity generation through 2035.
In what appears far more a political pitch than a projection, the IEA claims that renewables are to “take their place in the sun.” But in fact what the report is talking about is hydroelectric power and biofuels, which are still dogged by their impact on food prices. Wind and solar accounted in 2010 for scarcely 1% of primary energy demand. They will reportedly “soar” by 2035 to … 4%. Meanwhile, that place in the sun can only be secured by putting taxpayers in the shade. Renewables’ “success” is predicated on global subsidies rising from US$88-billion in 2011 to nearly US$240-billion by 2035.
For the rest of this column, please go to the National Post website: http://opinion.financialpost.com/2012/11/13/peter-foster-anti-markets-drivel/