How Energy Coordination on One Continent Could Bring the Planet to Its Knees
It’s a ritual long familiar to observers of American politics: presidential hopefuls with limited international experience travel to foreign lands and deliver speeches designed to showcase their grasp of foreign affairs. Typically, such escapades involve trips to major European capitals or active war zones like Iraq and Afghanistan. New Jersey Governor Chris Christie, however, has broken this mold. Before his recent jaunt to London and into the thickets of American vaccination politics, he chose two surprising destinations for his first trips abroad as a potential Republican candidate. No, not Kabul or Baghdad or even Paris, but Mexico City and Alberta, Canada. And rather than launch into discussions of immigration, terrorism, or the other usual Republican foreign policy topics, he focused on his own top priority: integrating Canada and Mexico into a U.S.-led “North American energy renaissance.”
By accelerating the exploitation of fossil fuels across the continent, reducing governmental oversight of drilling operations in all three countries, and building more cross-border pipelines like the Keystone XL, Christie explained, all three countries would be guaranteed dramatic economic growth. “In North America, we have resources waiting to be tapped,” he assured business leaders in Mexico City. “What is required is the vision to maximize our growth, the political will to unlock our potential, and the understanding that working together on strategic priorities… is the path to a better life.”
At first glance, Christie’s blueprint for his North American energy renaissance seems to be a familiar enough amalgam of common Republican tropes: support for that Keystone XL pipeline slated to bring Canadian tar sands to the U.S. Gulf Coast, along with unbridled energy production everywhere; opposition to excessive governmental regulation; free trade… well, you know the mantra. But don’t be fooled. Something far grander — and more sinister — is being proposed. It’s nothing less than a plan to convert Canada and Mexico into energy colonies of the United States, while creating a North American power bloc capable of aggressively taking on Russia, China, and other foreign challengers.
This outlook — call it North Americanism — is hardly unique to Christie. It pervades the thinking of top Republican leaders and puts their otherwise almost inexplicably ardent support of Keystone XL in a new light. As most analysts now concede, that pipeline will do little to generate long-term jobs or promote U.S. energy independence. (Much of the tar sands oil it’s designed to carry will be refined in the U.S., but exported elsewhere). In fact, with oil prices plunging globally, it looks ever more like a white elephant of a project, yet it remains the Republican majority’s top legislative priority. The reason: it is the concrete manifestation of Christie-style North American energy integration, and for that reason is considered sacred by Republican proponents of North Americanism. “This is not about sending ‘your oil’ across ‘our land,’” Christie insisted in Calgary. “It’s about maximizing the benefits of North America’s natural resources for everybody.”
While North American energy integration may, in part, appeal to Republicans for the way it would enrich major U.S. oil companies, pipeline firms, and some energy-industry workers — the “everybody” in Christie’s remarks — its real allure lies in the way they believe it will buttress the more hawkish and militarized foreign policy that so many in the GOP now favor. By boosting fossil fuel production in North America, Keystone’s backers claim, the U.S. will be less dependent on imports from the Middle East and so in a stronger position to combat Russia, Iran, ISIS, and other foreign challengers.
Authorization for Keystone XL and related energy infrastructure is important “not just for economic development, not just for jobs and growth,” Senator Ted Cruz of Texas declared in January, “but also for the enormous geopolitical advantages that it will present to the United States [by strengthening] our hands against those who would be enemies of America.”
Brace yourself. This combination of fossil fuel optimization and North American solidarity against a potentially hostile world is destined to become the core of the Republican economic and national security platforms in the 2016 presidential election. It will similarly govern action in Congress over the next two years. So, if you want to understand the dynamics of contemporary American politics, it’s crucial to grasp the new Republican vision of an energy-saturated North America.
Exxon’s Neo-Imperial Vision
Republican-style North Americanism is, in fact, an amalgam of two intersecting urges. The first of them involves a quest by U.S.-based giant oil companies to gain greater access to the oil and natural gas reserves of Canada and Mexico; the second, a drive by neoconservatives and national security hawks in Washington to rev up Cold War 2.0, while stepping up combat with both Iran and the Islamic State.
Let’s start with the altered world energy order once dominated by privately owned giants like BP, Chevron, and ExxonMobil — a.k.a. the international oil companies, or IOCs. For most of the twentieth century, these companies controlled a majority of the world’s oil and gas reserves and so almost completely dominated the global trade in hydrocarbons. In the 1970s and 1980s, however, many of their overseas assets were systematically appropriated by governments in oil-producing countries like Saudi Arabia, Algeria, and Venezuela, and placed under the control of state-owned, national oil companies, or NOCs. In response, the IOCs sought to increase their production from reserves in Canada and the U.S., as well as in Mexico, which has its own state-owned oil company but was facing declining output. This led those big companies to believe that, in the long run, Mexico would be forced to open its doors to greater foreign involvement.
Their strategy proved widely successful in the U.S., where the application of new technologies, including hydro-fracking, horizontal drilling, and deepwater drilling, has led to spectacular increases in oil and gas output. According to the Energy Information Administration of the Department of Energy, U.S. field production of crude oil jumped from five million barrels per day in 2008 to 8.6 million barrels in the third quarter of 2014. Over the same period, the production of natural gas similarly rose from 21.1 to 25.7 trillion cubic feet. The current plunge in oil prices is expected to slow the pace of U.S. drilling, but not prevent further gains.
Stepped-up investment by the big energy companies led to a comparable increase in production from Canada’s tar sands (also called oil sands). According to BP, Canadian crude output climbed from 3.2 million barrels per day in 2008 to nearly 4.0 million barrels by the end of 2013, thanks purely to those tar sands. But the producers of all this added oil have run into a major obstacle to its successful commercialization: there are not enough pipelines to transport this particularly carbon-dense crude to refineries in the United States, where it can be processed into usable petroleum products. Hence, the need for additional pipelines, beginning with Keystone XL. Indeed, with the recent fall in oil prices, Keystone has become even more important, as other modes of transport, including delivery by rail, are far more costly.
Mexico presents a different set of obstacles. Under the Mexican Constitution, all hydrocarbon deposits are the property of the Mexican people and their exploitation is reserved solely for the state-owned company, Petróleos Mexicanos (Pemex). The country’s expropriation of foreign oil assets on March 18, 1937, is considered a pillar of Mexican sovereignty and that day is still celebrated as a national holiday (Día de la Expropiación Petrolera). As a result, the only way the giant oil companies could gain access to Mexico’s vast reserves of oil and gas would be if its leaders were willing to amend existing laws to allow the involvement of foreign firms in the development of these assets.
In response to such obstacles, the major U.S.-based oil companies and their financial backers have developed a strategy to promote North American energy interdependence, while stressing the beneficial value of increased U.S. participation in Canada’s and Mexico’s energy industries and the elimination of barriers to cross-border pipelines and other transnational energy infrastructure.
Although oil company executives have rarely discussed such strategic planning in public, there was an exception. In 2012, before the Council on Foreign Relations, Rex Tillerson, chairman and CEO of ExxonMobil, gave its North American strategy an unusually candid airing. “Canada has a huge resource endowment,” he noted. “The United States has a huge resource endowment; Mexico has a huge resource endowment.” In that light, he suggested that the major U.S. energy firms coordinate the full-scale exploitation of all three countries’ fossil fuels. “[If] we approach energy policy and energy security from a North American perspective, the resource base, the technologies that are available, and the like-minded policies that could be put in place could rapidly achieve that energy security that we have been in quest of for all of my career.”
Canada and the U.S., he pointed out then, were already moving to embrace such “like-minded policies,” but Mexico still had a long way to go. “We’re hopeful,” he added, “that Mexico, as it continues its pathway to reforms around how it manages its own oil and natural gas resources… will open up opportunities for greater partnerships and collaborations [while] bringing technology to bear on the huge resources that Mexico has as well.”
The task, then, was simply to persuade the leaders of Canada, Mexico, and the U.S. to harmonize their energy policies. As Tillerson explained, “It’s my hope that at some point energy security can become a policy issue in our foreign policy discussions with Mexico, Canada, and the United States.” In this Big Oil view of how North America should work lay the foundations for the new Republican strategic vision that Chris Christie, Ted Cruz, and other presidential candidates for 2016 are going to turn into an overarching political mantra.
The New Cold War
Now, imagine a second river of energy exuberance flowing into Big Oil’s strategic vision. This would be the reinvigorated Cold War stance of Republican hawks and neocons. Led by Senator John McCain (now chair of the Senate Armed Services Committee), these advocates for an ever more aggressive foreign/military policy are pushing the idea that a series of foreign adversaries — Russia, China, Iran, and Islamic terrorists — are ratcheting up the dangers for this country and that the Obama administration’s response is woefully feeble.
The president’s failure to effectively resist belligerent moves by Russia in the Crimea and Ukraine, McCain argues, has “fed a perception that the United States is weak,” and for figures like Russian President Vladimir Putin, “vacillation invites aggression.” Not only has the president’s claimed policy weakness invited further assaults from Russia in Eurasia, but it has also “emboldened other aggressive actors — from Chinese nationalists to al-Qaeda terrorists and Iranian theocrats.”
As McCain, other Senate and House war hawks, and their neocon allies see it, there is only one appropriate response to such threats: a vigorous counterattack, involving beefed-up support for NATO, copious arms deliveries to the Ukrainians, and increased defense expenditures at home. “When aggressive rulers or violent fanatics threaten our ideals [and] our interests,” McCain typically asserted last November, the country needs “not good intentions, or strong words, or a grand coalition, [but] the capability, credibility, and global reach of American hard power.”
While “hard power” may be the preferred response of such hawks, most do recognize that the direct use of military force by the United States in Ukraine and a number of other places is unlikely, even under a future Republican administration. Public fatigue over American wars in the Greater Middle East coupled with mounting budget woes and a lack of support from Washington’s allies rules out such moves. This means another powerful form of pressure is needed — and here’s where energy enters the picture.
As McCain and his allies see it, an energy-based North Americanism could prove to be an effective tool in the new Cold War. Noting that many of Washington’s NATO allies are heavily dependent on Russian natural gas and so — it is claimed — vulnerable to future political pressure from Moscow, they are, for instance, promoting the production of ever more natural gas via hydro-fracking to ship off to Europe in the form of liquefied natural gas (LNG). This, they insist, should be one of the country’s top future priorities. “Today, the U.S. has the leverage to liberate our allies from Russia’s stranglehold on the European natural gas market,” McCain and fellow Republican Senator John Hoeven wrote in July. All that is needed, they insist, is to eliminate government obstacles to drilling on federal lands and the approval of the construction of additional LNG export facilities.
The Republican Grand Strategy
This approach has been embraced by other senior Republican figures who see increased North American hydrocarbon output as the ideal response to Russian assertiveness. In other words, the two pillars of a new energy North Americanism — enhanced collaboration with the big oil companies across the continent and reinvigorated Cold Warism — are now being folded into a single Republican grand strategy. Nothing will prepare the West better to fight Russia or just about any other hostile power on the planet than the conversion of North America into a bastion of fossil fuel abundance.
This strange, chilling vision of an American (and global) future was succinctly described by former Secretary of State Condoleezza Rice in a remarkable Washington Post op-ed in March 2014. She essentially called for North America to flood the global energy market, causing a plunge in oil prices and bankrupting the Russians. “Putin is playing for the long haul, cleverly exploiting every opening he sees,” she wrote, but “Moscow is not immune from pressure.” Putin and Co. require high oil and gas prices to finance their aggressive activities, “and soon, North America’s bounty of oil and gas will swamp Moscow’s capacity.” By “authorizing the Keystone XL pipeline and championing natural gas exports,” she asserted, Washington would signal “that we intend to do exactly that.”
So now you know: approval of the Keystone XL pipeline isn’t actually about jobs and the economy; it’s about battling Vladimir Putin, the Iranian mullahs, and America’s other adversaries. “One of the ways we fight back, one of the ways we push back is we take control of our own energy destiny,” said Senator Hoeven on January 7th, when introducing legislation to authorize construction of that pipeline.
And that, it turns out, is just the beginning of the “benefits” that North Americanism will supposedly bring. Ultimately, the goals of this strategy are to perpetuate the dominance of fossil fuels in North America’s energy mix and to enlist Canada and Mexico in a U.S.-led drive to ensure the continued dominance of the West in key regions of the world. Stay tuned: you’ll be hearing a lot more about this ambitious strategy as the Republican presidential hopefuls begin making their campaign rounds.
Keep in mind, though, that this is potentially dangerous stuff at every level — from the urge to ratchet up a conflict with Russia to the desire to produce and consume ever more North American fossil fuels (not exactly a surprising impulse given the Republicans’ heavy reliance on campaign contributions from Big Energy). In the coming months, the Obama administration and Hillary Clinton’s camp will, of course, attempt to counter this drive. Their efforts will, however, be undermined by their sympathy for many of its components. Obama, for instance, has boasted more than once of his success in increasing U.S. oil and gas production, while Clinton has repeatedly called for a more combative foreign policy. Nor has either of them yet come up with a grand strategy as seemingly broad and attractive as Republican North Americanism. If that plan is to be taken on seriously as the dangerous contrivance it is, it evidently will fall to others to do so.
This Republican vision, after all, rests on the desire of giant oil companies to eliminate government regulation and bring the energy industries of Canada and Mexico under their corporate sway. Were this to happen, it would sabotage efforts to curb carbon emissions from fossil fuels in a major way, while undermining the sovereignty of Canada and Mexico. In the process, the natural environment would suffer horribly as regulatory constraints against hazardous drilling practices would be eroded in all three countries. Stepped-up drilling, hydrofracking, and tar sands production would also result in the increased diversion of water to energy production, reducing supplies for farming while increasing the risk that leaking drilling fluids will contaminate drinking water and aquifers.
No less worrisome, the Republican strategy would result in a far more polarized and dangerous international environment, in which hopes for achieving any kind of peace in Ukraine, Syria, or elsewhere would disappear. The urge to convert North America into a unified garrison state under U.S. (energy) command would undoubtedly prompt similar initiatives abroad, with China moving ever closer to Russia and other blocs forming elsewhere.
In addition, those who seek to use energy as a tool of coercion should not be surprised to discover that they are inviting its use by hostile parties — and in such conflicts the U.S. and its allies would not emerge unscathed. In other words, the shining Republican vision of a North American energy fortress will, in reality, prove to be a nightmare of environmental degradation and global conflict. Unfortunately, this may not be obvious by election season 2016, so watch out.