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Thursday, September 15, 2005

Richard Nixon and Project Independence

We're currently reading "The Tar Sands: Syncrude and the Politics of Oil" by Larry Pratt for our Canadian Public Policy class. It's quite an interesting read. We never knew natural resource policy and the history of Alberta's tarsands was so interesting.

As well, we thought this clip from pages 49 - 50 of said book was interesting and quite telling...

One month following the outbreak of the Yom Kippur Middle East war of October 1973, with the United States deep in the grip of Watergate fever compounded by the anxiety over the Arab oil boycott, former U.S. President Richard M. Nixon appeared on American television to prescribe strong medicine, his antidote for the energy crisis.

Nixon named it "Project Independence." The challenge facing the United States, he declared, was to regain the strength of self-sufficiency in energy. This was a key to Americans predominance among the nations. "Our ability to meet our own energy needs is directly linked to our continued ability to act decisively and independently at home and abroad in the service of peace, not only for America, bur for all nations in the world." Calling for "focused leadership" to achieve self-sufficiency by 1980, Nixon likened his challenge to earlier crash programs to develop the atomic bomb and to put a man on the moon. He went on to promise massive public funding for the exploration of American's remaining energy resources-Alaskan oil and gas, offshore oil reserves, nuclear energy and synthetic fuels from coal and oil shale. A few days later, Nixon reiterated his challenge, linking it to rumour circulating Washington that the "blue-eyed Arabs" of Canada were taking advantage of America's energy plant. The United States, Nixon asserted, should be independent of all oil producing countries, "including our Canadian friends," by 1976. Canadians "can be pretty tough on us sometimes when they are looking down our throats." This did not mean that the U.S. would not continue to desire the oil of he Middle East of the gas of Siberia or that she would cease energy cooperation with Canada or Latin America. "But it does mean that the United States must be independent in this area, and we can be."

1 comment:

Anonymotron said...

...and then reality intervened.

This was a modern American president doing the unthinkable: Asking his people to sacrifice something for the greater good. Sacrifice and "pulling together" went out with the second world war.

Americans will stop improving their energy efficiency at the point where the marginal returns from doing so no longer cover the cost of the improvements. In other words, the price of oil has to be high enough to act as an incentive to develop new technologies and find ways to reduce consumption. The president can tall all he wants about energy independence, but unless the incentives are there nothing's going to change.

Because of the cost of developing new energy infrastructure to transport and use hydrocarbons, not to mention the cost of developing the new technologies in the first place, America will probably need our oil for a while yet. But you can probably count on simple ways to improve efficiency becomming common. I.e., expect to be driving a hybrid in ten years.

I don't know how much these consumption efforts will drive down the price of oil, but it will be interesting to see. The current price of oil has a huge risk premium built in. What will the price of oil be if/when the middle east is stable and new refining/transportation capacity has been developed?

(I'm waiting for the headline: "Alberta agents caught red-handed exporting explosives, insurgents to Iraq")

American reliance on our natural resources isn't new, but as they grow more reliant on the oilsands you'll see NDP politicians start to say things like "If the Americans don't give us X, we should just shut off the pipelines." The problem is that's a race to the bottom -- the US is more than capable of retaliation that would injure us as much, or more. And ultimately, they could always invade if it became an issue of national survival. (But I'll stay away from that tin foil hat subject.)

The best thing Canada can do is enhance our infrastructure for moving oil and gas to China. That gives us a bargaining chip against the Americans, because the last thing they want to see is locally located oil being given to the new Russia.

Maybe the real reason for Nixon's comments was "that asshole Trudeau." Lord knows I'd be looking for energy independence if that no-good hippie was holding all the cards.