[Canadian energy] Superpower challenges – by Peter Foster (National Post – February 6, 2013)

The National Post is Canada’s second largest national paper.

The energy superpower field becomes more crowded as U.S. output grows

Seven years ago, Stephen Harper declared Canada an “emerging energy superpower.” This week, the American Petroleum Institute suggested that the U.S., too, was turning into an “energy superpower.” Whether that represents national brand infringement, it certainly reflects challenges on the policy front.

“Superpower” status used to be measured exclusively in terms of destructive potential, so we should perhaps be grateful that the term is now as often linked to resource development. This reflects two quite different meanings of “power.” Economic power means the ability to offer inducements to provide goods and services.

Political power means the potential or actual use of coercive force. Mr. Harper in fact noted the difference when taking a dig at Vladimir Putin on his way to a G8 meeting in Russian in July, 2006. “We believe in the free exchange of energy products based on competitive market principles,” he said, “not self-serving monopolistic political strategies.” The Russian government had recently shut off gas supplies to Ukraine to exert political pressure.

When it comes to the U.S., it is already both a political and resource superpower, but technical advances have opened vast new petroleum potential. This promises to achieve the elusive — although often misguided — goal of energy independence (for North America).

Calls for resource independence are often rooted in economically challenged notions about the virtue of autarchy, which is uncomfortable not merely with imports but exports.

That concept is rearing its ugly head south of the border in domestic opposition to U.S. gas exports. Ironically, this replays the economic nationalism that characterized some Canadian attitudes toward gas exports to the U.S. in the 1970s.

In the event, natural gas became one of Canada’s greatest export earners, but gas export revenues have dived in recent years as domestic U.S. supply has increased, and prices have slumped. Meanwhile Canada, contrary to those 1970s projections, has natural gas in super-abundance. Unlike the U.S., however, there doesn’t seem to be too much opposition to exporting it to Asian markets. Perhaps we do learn something from history after all.

The danger with declaring emerging energy superpower status is that this might incline a government to encourage the process along. Fortunately, despite the odd bout of necessary expedience, Mr. Harper is anything but a dirigiste. When he first made that “energy superpower” remark, it seemed to amount less to a government-led strategic vision than to a simple acknowledgment of the country’s vast petroleum resources, primarily in the oil sands of Alberta, and a commitment to remove regulatory roadblocks.

For the rest of this article, please go to the National Post website: http://opinion.financialpost.com/2013/02/05/peter-foster-superpower-challenges/

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