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12:02AM

Canada looks east, as US market complications pile up

Per the recent Wikistrat simulation (North America's Export Energy Boom), Canada grows weary of the complications of exporting energy to the US market (see Keystone XL) and starts to spot easier venues going West to Asia:

Kinder Morgan Energy Partners LP KMP +0.40% said Thursday it will begin a $5 billion expansion of its Trans Mountain pipeline, nearly tripling the capacity of crude oil it can ship to Canada's west coast—the latest project aimed at moving the country's rising oil production to markets outside the U.S.

Currently, almost all Canadian crude exports travel to the U.S. While Canadian oil output has been climbing fast, pipeline capacity to move it from the country's biggest oil patch in landlocked Alberta to U.S. refining markets is stretched. 

The resulting glut, and rising oil production in the U.S. itself, has depressed prices for Canadian crude.

Our dysfunctional politics not only scares off the Canadians, it creates the same weird glut dynamic amidst our fabulous boom in natural gas production.  While Asian markets scream for LNG and can't get nearly enough, we refuse to export. An objective look at that would suggest some dumbass mercantilist logic having gripped some immature rising economy, but - of course - those who seek to deny LNG exports have all sorts of economic illogic at their disposal.

Meanwhile, we demonize China over similar bouts of stupidity, but at least there you can spot some legitimate developmental logic (all those rural interior poor still to be delivered).

We are living through some very bad political leadership and have for years now. I think history will judge the Boomer generation as among the worst political leadership cohorts ever suffered by America.

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Reader Comments (5)

Professor Barnett references the poor record of baby boomers and leadership. Please tell me why he supports one of the worst examples in Romney who avoided the draft during Vietnam by living in Paris and recruiting a couple of people to Mormonism over several years and whose own sons avoided military conflicts. A guy who loves firing people. What a joke! Coupled with a bunch of lunatic Republicans who are wanting to return to the 18th century. Of course the boomer generation has problems. Face it. The previous generation led imperial wars murdering millions in Indochina. LBJ, JFK, Rusk, McNamara, Nixon, Kissinger, et al should have been hung for war crimes, but never faced any such result. So later boomers like GW Bush and Cheney lied to wage war and murder Iraqis and condoned a culture of torture. Clinton and his dalliances pale in comparison.

April 24, 2012 | Unregistered CommenterRodney Derrick

Good campaign election fodder for Romney.

April 24, 2012 | Unregistered CommenterJeff Jennings

We seem to be good at exporting corporate headquarters. Thanks to the fools and knaves in D.C. you can make money in the United States but avoid paying taxes here by renting a mail box in some 4th world shopping mall. The CEO's say our tax rate is too high. Some suggest that if the rate were lowered Corporations would return. But no one can do the math.

Now the Canadians are victims of our left vs. right, green vs. greed, dog vs. cat, political circus. "No pipeline here" the naysayers scream. When we talk about being "Energy Independent" are we talking about Canada for God's sake?

Our system for selecting national leaders is seriously out of whack. That is what we need to work on.

April 24, 2012 | Unregistered CommenterTed O'Connor

Tom, I understand that the biggest impediment to export of LNG is the terminals we built over the last ten years or so. They're built to receive and process, not process and ship, natural gas. I understand the terminal on the Louisiana side of the Sabine Pass (TX) just got permission to export, but they have lengthy and very expensive re-tooling to do before the first ship can load.

April 25, 2012 | Unregistered CommenterRobert

Rodney Derrick - Dr. Barnett supported Obama in the last election and last I noticed is generally a Democrat. That he is supporting Romney is news to me but personally I don't find it difficult at all to understand why President Obama's record might cause him to reconsider.

As for Romney himself, by all accounts including those of his sane opponents, Gov. Romney is a successful turnaround specialist with history in three arenas. That Paris mission you denigrate, the 2002 Olympics, and in business. Arguably you can add a fourth, his time as Gov of Massachusetts but I'd stick with the core three. Anybody who doesn't believe that the US needs to undergo a turnaround hasn't been paying attention.

April 27, 2012 | Unregistered CommenterTMLutas

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