Is it time to start nurturing a stronger “NOPEC”?
posted at 2:31 pm on June 13, 2014 by Erika Johnsen
The obvious answer is an emphatic, resounding “Duh!“, and the insurgency going down in Iraq is far from the only very excellent reason why. In just the past couple of years, we’ve seen major production disruptions from Libya, Sudan, and Nigeria; we’ve sidelined Iran with sanctions on their energy-dependent economy to put pressure on their nuclear program; and Venezuela is looking none too stable these days, is it?
These guys are all big players in the worldwide energy scene, and since the most efficient way to engender global energy security and economic prosperity is to consistently add greater volumes to the “global bathtub” that is the international oil market, the North American reserves recently unlocked by technological innovation present an excellent opportunity for Canada, the U.S., and Mexico to ramp up production and make some major money while applying downward pressure on global gas prices. As CNBC’s Ron Insana notes, fully unleashing our combined energy forces is an excellent strategy to start employing more robustly, on behalf of both our economy and our foreign policy:
With the U.S. leading the way in the fracking revolution, Canada in tar sands and with a newly liberalized energy sector in Mexico, North America could easily rival and exceed OPEC’s production of crude oil, natural gas, distillates and other petrochemical products—making North America the envy of the energy world.
It saddens me that in the absence of any cogent fiscal policy efforts emerging in Washington, something as simple, and beneficial, as the notion of NOPEC has not made its way to the West Wing. …
Combined, NOPEC could become the “swing producer” of energy products in world markets, helping to drive down prices of energy products that are currently hostage to OPEC’s whims, geopolitical risk and, on occasion, excessive speculation that whips oil markets round and round.
In addition, a concerted effort by the Three Amigos could also expand the opportunity for North America to become the world’s manufacturing hub, thanks to advantageous energy pricing, increasingly competitive labor markets, property rights protections, the rule of law and relative political stability.
There are, unfortunately, some major standing obstacles to this empowered NOPEC scenario, not the least of which is the Obama administration more or less stalling on allowing offshore drilling, drilling on federal lands, and furthering Arctic exploration. What’s more, the White House seems determined to stick it to Canada by continuing to dither on the Keystone XL pipeline, so as not to appear too sympathetic to the fossil fuel industry and piss off the Tom Steyers of progressive donor circles. Mexico, for its part, has finally, mercifully decided to break up its state monopoly and allow for foreign investment in their energy sector — although the perhaps even bigger problem is that foreign investors might not want to even go there, what with the gang violence that has pieces of Mexico sliced and diced into veritable war zones. Via Bloomberg:
Oil shale drillers in Texas have had to contend with environmental opposition and soaring costs. A few miles south of the border in Mexico, Angel Torrez and co-workers duck gunfire sprayed from drug traffickers. …
Torrez’s predicament reveals the challenge facing Mexico as it attempts to replicate the kind of shale bonanza taking place in Texas. …
“Shale will not take off in Mexico like it did in Texas in the near future,” Dwight Dyer, a senior analyst at the consulting company Control Risks, said by telephone from Mexico City. “Unless the security situation along the northeastern border improves significantly, smaller companies will probably take their time before jumping in.” …
The crime wave has also been hitting the national oil company’s bottom line. More than $300 million in stolen natural gas condensate from the Burgos basin was smuggled across the U.S. border by drug cartels from 2006 to 2010, according to a lawsuit filed by Pemex in a Houston federal court in 2010. Fuel-theft losses rose to 10.3 billion pesos ($790 million) last year from 3.5 billion pesos in 2009.
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