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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obama is the weakest link.

Schadenfreude on June 13, 2014 at 2:35 PM

NO! Keep whatever we extract to ourselves.

Also, HA. Fix your login bug.

nobar on June 13, 2014 at 2:37 PM

It is worth pointing out the only reason what is happening in Iraq is just disturbing rather than an economic catastrophe is fracking. That gives the US virtual energy independence. Without that we would be facing a stagnant economy stalling due to oil shortages and rising energy prices.

Ironic. The only reason Washington can still keep snorting unicorn dust and continue denying reality is because of a technology they have been unable to derail.

No Truce With Kings on June 13, 2014 at 2:50 PM

How about a NAPEC: North American Petroleum Exporting Countries?

If the EPA would get out of the way, maybe we could build enough refineries to convert fracked oil into something to run cars and trucks.

Steve Z on June 13, 2014 at 3:19 PM

The acronym starts out right NO, No Obama.

Sven on June 13, 2014 at 3:39 PM

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.

…I think it’s all part of the plan!

KOOLAID2 on June 13, 2014 at 3:42 PM

Sadly, “all of the above” rhetoric not withstanding, the Federal government is really backing none of the above. Permits if they come at all come at a snails pace. Coal is being regulated out of the electrical generation equation. Wind depends on subsidies that there is little mood in congress to support (for very good reason). Ethanol mandates are moving back (as they should). Fracking is still banned in many states and Canadian areas. Nuclear is stuck in the mud and even existing plants face non-renewal of licenses (Indian Points 1 and 2). Pipelines are held up in deference to railroad and enviro interests. Public lands are virtually off limits as is most of the coastal areas. Demands to jack up taxes on energy producers are constant even as the public complains that energy prices are too high.

This does not sound like a formula for getting a lock on the world energy market.

KW64 on June 13, 2014 at 3:53 PM

“There are, unfortunately, some major standing obstacles to this empowered NOPEC scenario, not the least of which is the Obama administration…”

PERIOD.
FULL STOP.

jbspry on June 13, 2014 at 3:58 PM

Cue J.B.Kelly’s timeless essays, republished in book form:
The Oil Cringe of the West: The Collected Essays and Reviews of J.B. Kelly Vol. 2.

“This, the second volume of JB Kelly’s essays and reviews, covers the oil crisis of the 1970’s—a period which first alerted the Western world not only to the deep-seated animosity and contempt with which it is held by the Arab world, but also the duplicity and double-dealing in which Arabs, especially the Saudis, routinely engage when dealing with Western leaders. America’s feeble response during this challenge undoubtedly confirmed in the minds of Arab leaders that the Western world is essentially weak and can easily be manipulated. As JBK pointed out, there were ‘substantial grounds for believing that the motive behind the excessive prices now being charged for Middle-Eastern oil is political and religious rather than economic, and is designed to redress the balance between the Islamic countries of the Middle East and Western Europe, which has been tilted in favour of the latter for two centuries or more.’ It was summed up by the exclamation from one Arab oil state official in December 1973: “It is our revenge for Poitiers!” (a reference to Charles Martel’s defeat of the Arab armies in France in 732).

One of J.B.Kelly’s enduring essays was posted online at JihadWatch.org in 2008 – :

J.B. Kelly: Of Valuable Oil & Worthless Policies

This article first appeared in the British magazine Encounter in July 1979. 29 years later, Kelly’s observations remain relevant, and the situation remains in many ways virtually unchanged

heroyalwhyness on June 13, 2014 at 4:45 PM

But would it be green? Could we export the wind energy? How’s about solar? Dare I say Keystone P/L.

COgirl on June 13, 2014 at 5:29 PM

KW64 on June 13, 2014 at 3:53 PM

I’ve worked as a consultant doing the paperwork and underwriting for pipelines and charters through the boom and the fed government has not been the bottleneck on any of my projects. Creating heavy infrastructure where there was none is the challenge. Holding off the Canadian end of Keystone actually benefits US production. They are expanding the existing US-Canada pipeline capacity even without Keystone. Domestic pipelines are being built all over the place. Drilling on gov’t land is still much cheaper than private land (effectively, still a subsidy). Creating another cartel will not bring energy prices down. So far, our domestic industries have benefited from stable but high pricing set by OPEC. US margins are much thinner than those for the Gulf states.

lexhamfox on June 13, 2014 at 6:24 PM