WHesterN Hemisphere

It is easy to understand the US preoccupation with energy security. After all, the country is the world’s largest oil consumer and in spite of also being one of the world’s largest producers, its oil production is in decline. The reality for now and for the foreseeable future is of increasing dependence on foreign suppliers. As China and India compete for a share of those same resources, US insecurity grows. While this scenario has provided the basis for support of an aggressive biofuels agenda, biofuels will only help improve energy security at the margin. On the other hand, unconventional oil production from Western Canada will unquestionably alleviate American security woes.

However, in spite of this, Canadian oil sands will bear the brunt of the penalties imposed on the industry from new environmental legislation, and compared to other potential fuel sources, will receive the least support for the development of technologies to mitigate its environmental footprint.

This is rather puzzling to me. In an attempt to find some other perspectives the Canadian Consulate in NY (they were superlative, by the way), helped me engage with some key American energy journalist and policy advisors. After almost three hours of discussions I am afraid to say, I am no wiser than before. It seems that even experts on energy matters equate improvements in US energy security to a combination of conservation and the rise of alternative fuels. The argument used is that what really matters is the incremental barrel… that is what “economists” deem the really important issue.

Well, I respond… I am an economist and while I do not argue against the importance of the incremental barrel, I question the wisdom of paying no attention to the everyday bread, as opposed to the muffins, cinnamon rolls, and Danishes.

Doesn’t it makes sense to dedicate time and resources to ensure you can deliver the most “wholesome” loaf of bread everyday, before (or at least at the same time) you pay greater attention to baking a ton of specialty products?

Yeah… makes sense to me, but no one was ready to concede the point right then and there…. as I left to deliver another lecture – this time on Brazil – my comment to my Canadian hosts was: if we managed to get one of them thinking differently it was worth the price of admission!

What do you think?