By Carl Pope, Bloomberg A fundamental question faces the US: Is our vision of the future Made in America or Saudi America? Does the US want to reclaim its value-added manufacturing economy, or become an extractive petro-state? Will the US produce cars and the fuels to power them, or keep importing both foreign cars and refined fuels even as we export cheap domestic oil and natural gas? The US oil industry views exports of natural gas and crude oil as a twin engine capable of powering windfall profits. Thanks to a confluence of abundant domestic fuel and the industry’s even more voluminous greed, it appears we’ll finally have the national dialogue we have long needed on energy’s role in our economic future. Six months ago, when I warned in Bloomberg View that the oil industry intended to lock in ever higher North American oil prices by gutting the federal ban on oil exports, some observers thought this ‘‘unthinkable.” Now, Senator Lisa Murkowski, the ranking Republican on the Senate Committee on Energy and Natural Resources, Energy Secretary Ernest Moniz and the US Chamber of Commerce have all signaled that they no longer believe the US should keep its natural gas and crude oil at home. Senate hearings are set to began Jan. 30. In recent months, the Department of Energy has approved, on average, a new export permit for LNG every six weeks. In response, Democratic Senator Debbie Stabenow of Michigan blocked one of President Barack Obama’s Energy Department nominees because she considers these almost automatic permit approvals to be reckless. The battle is joined. Exporting US crude will affect more than the price of gas; the nation’s shipping industry is also at risk. If exports can travel in cheap Liberian tankers, the oil industry claims, it’s unfair to require crude shipped from the US Gulf to the East Coast to use the more expensive US Merchant Marine. (The other option, to require all shipments of US oil to travel in US ships served by American crews, simply doesn’t occur to the government these days.) Some independent refiners, who want cheap US 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 Corp., the Chamber of Commerce (so much for its defense of all US business), the states of Alaska, North Dakota, Louisiana and Texas, and competitors to US 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 US as a middle-class manufacturing power – more like Germany but with lower fuel costs. The US 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 US $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. We can expect a similar result if the US opts to export oil. Meanwhile, at least nine European nations are seeking to support the US oil and gas lobby to pressure the federal government into exporting natural gas, as well. It’s understandable that foreign manufacturers would like access to cheap US fuel to help them undercut American steel, cars and chemicals products. But nothing about that is good for the average US worker or company. Let’s keep our oil and gas on American soil, in the American economy. Carl Pope is a former chairman of the Sierra Club.
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