IMMEDIATE RELEASE 19 November 2014
Today’s Events in Historical Perspective
America’s Longest-Running Column, Founded 1932
Why sell North American oil to China?
By Douglas Cohn and Eleanor Clift
WASHINGTON – Approval of the Keystone pipeline failed by one vote in the U.S. Senate on Tuesday evening. Fourteen Democrats joined all 45 Republicans to green light the project, signaling that once the GOP takes control of the Senate in January, Keystone is certain to reach the president’s desk.
Then it’s up to President Obama to either veto the legislation, or use it as a bargaining chip to wrest a concession out of the GOP-controlled Senate in exchange for his signature. One proposal being floated is an increase in the federal minimum wage to $10.10 an hour. That would give each political party the bragging rights for fulfilling a key campaign promise.
But before getting too deep into transactional politics, we should ask whether it might be smarter to leave the oil in the ground. Environmentalists have made good arguments. The Canadian tar sands oil is hard to extract, it requires a lot of water to exert pressure underground, and with water becoming an increasingly precious commodity, going after oil may not be its highest and best use.
There’s also the worry about spillage, and the pass that Republicans have given to Trans-Canada, the company that would transport the oil, to avoid contributing to the Oil Spill Liability Trust Fund. That doesn’t inspire confidence.
But there’s yet another reason, a reason that goes beyond environmental concerns, and it has to do with who benefits most from the tar sands oil flowing through the United States. Obama has pointed out that this would be Canadian oil heading to refineries in Texas, and it will be heading out into the global market where the second largest importer and consumer, China, is thirstily awaiting.
It wasn’t too long ago that China surpassed Japan as the second largest economy, and in 2013 China became the world’s largest importer and consumer of oil. The Chinese government is doing everything it can to change this by eventuality by putting resources and capital into sustainable energy and openly proclaiming that it wants to be the leader in alternative energy sources.
China already leads the market in solar panels, which should be a lesson to American entrepreneurs that this is an ongoing world competition for the energy sources and technology of tomorrow and that U.S. businesses can’t afford to lose.
Meanwhile, oil prices are way down. A barrel of oil is cheaper now than it’s been for some time, so why should the politicians battle each other in Congress for the privilege of making it easier for the Canadians to transport their oil? Why not leave it in the ground for future generations?
It’s still a scarce resource, and it’s vital to our national security. The government recognizes that stockpiling oil in the Strategic Petroleum Reserve (SPR) is a kind of rainy day fund that presidents occasionally draw down when there is a Middle East embargo, or some other strain on the oil markets. And although the SPR can hold up to 727 million barrels of oil, it cannot begin to store all that would come through the Keystone pipeline. However, there is another larger storage facility where it already sits: in the ground. Twenty years from now, or 50 years from now, we might regret going ahead with Keystone when that oil could be so much more valuable, and critical, at some point in the future.
Why not let Saudi Arabia and other oil exporters deplete their reserves, especially at these bargain prices.
© 2014 U.S. News Syndicate, Inc.
Distributed by U.S. News Syndicate, Inc.
END WASHINGTON MERRY-GO-ROUND