American Elephants

Obama Follows Up On Very Bad Week With Diplomacy Disaster by The Elephant's Child
April 4, 2012, 6:56 pm
Filed under: Capitalism, Economy, Energy | Tags: , ,

Tuesday’s “Three Amigos” summit meeting was a little different from the usual North American get-together. Obama took the occasion to inappropriately attack the Supreme Court in response to a reporter’s question, but otherwise the media recorded the meeting as— “Obama talks trade, energy with Canada Mexico leaders at Summit (AP).”The press in Canada and Mexico reported it a little differently.

Obama’s neglect of the North American Free Trade Act has put the three nation alliance “on life support.” Obama’s political ploy of denying the Keystone XL pipeline —till after the election — has not only annoyed Americans who were hoping for those jobs, but it has annoyed the Canadians to the point that they will no longer consider America as a single customer. Canada is preparing to sell their oil to China. Until now NAFTA has shielded the U.S. from having to pay global prices for Canadian oil. That will change.

Trade watchers have known that the U.S. has blocked Canada’s entry to the eight-way free trade agreement known as the Trans-Pacific Partnership, an alliance of the U.S., Australia, New Zealand, Vietnam, Malaysia, Peru, Chile and Singapore. Both Canada and Mexico want to be part of the agreement. Stephen Harper says: “Our strong sense is that most of the members of the Trans-Pacific Partnership would like to see Canada join.” This reveals that it is the Obama administration that is blocking Canada, and suggests that payback on energy is coming.

Mexican papers reported that President Felipe Calderon bitterly brought up Operation Fast and Furious, a U.S. government operation that permitted Mexican drug cartels to smuggle thousands of weapons into drug-war torn Mexico. This blunder has cost thousands of Mexican lives. Obama has feigned ignorance to the Mexicans, and hasn’t even apologized.

In an interview with former U.S. Rep. Jane Harmon (D-CA) on Monday, Prime Minister Harper explained that Canada will seek to expand its export market, and will cease to supply oil to the U.S. at a discounted rate. “Look, the very fact that a ‘no’ could even be said underscores to our country that we must diversify our energy export markets,” Harper told the audience of business people, scholars, diplomats and journalists.

Now two major energy companies are planning to build new pipeline that will move as much as 850,000 barrels of crude oil a day from Canada to refineries along the Gulf Coast by mid-2014. There are two separate projects planned by Houston-based Enterprise Products Partners LP and Enterbridge Inc. of Calgary.

Enbridge and Enterprise already operate the Seaway Pipeline which used to move oil north from Freeport, Texas to the massive oil storage hub in Cushing Oklahoma. Last year the companies said they would reverse the flow in that pipeline because the surge in oil from Canadian and U.S. production has created an overabundance of oil in Cushing. The reversal will let Seaway move up to 150,000 barrels a day south to refiners by June 1, and 400,000 barrels a day by early next year by adding new pumping stations.

The cross-border portions of the pipeline are already built. This will not negate the need for the Keystone XL, but simply add to capacity. The usual suspects, NRDC, Sierra Club and others will find some reason to object, and if that doesn’t work, they’ll find another.

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