03-01 Politics

I was a young engineering graduate in 1957 on a technical training course with Imperial Oil and listening to a lecturer at their Sarnia refinery provide some basics on the politics and economics of oil.
He explained how in Saudi Arabia they could produce a barrel of oil for only a dollar US which gave them enormous leverage in world markets. The Saudi’s had the power to drive more expensive producers out of business. Similar low-cost production was available in neighbouring countries like Iraq and Iran.
So today if you want to understand why the US is so emerged in the politics of oil, look at the efforts underway to keep Iran from exporting their oil. And similarly, look at why the US invaded Iraq. Again, it is about controlling the world price of oil.
Listening to US politicians the impression is given that they are concerned about high costs of energy for consumers. But it would be my judgement call that they want high energy prices and will do anything including going to war to prevent Iran and Iraq from flooding the market and keeping prices low.
Because the world is so dependent on oil and gas for its standard of living, it should not be a surprise that oil and gas is at the heart of politics in most of the developed economies.
In Canada, it is the politics of providing pipeline capacity so our oil can reach foreign markets. And it is tough for politicians trying to create the perception that they care about the amount of carbon dioxide produced through the combustion of oil and gas, and, at the same time, meeting the demands of the oil and gas sector for market access.
In Europe they have different energy politics and are consumers of energy rather than producers. Having visited Denmark, it is easy to appreciate people paying higher prices for energy produced by wind and solar. There is a political consensus that they are doing the right thing. There is no doubt in my mind that they will meet their emissions targets to reduce carbon in the atmosphere.
Nations like the US and Canada, on the other hand, will fail because they are so dependent on the production of oil and gas. And don’t blame the politicians. All of us want to help the environment as long as we don’t have to pay for it.
There is only one thing more powerful than the politics of oil and gas, and that is hydroelectric, nuclear, and renewables that produce power more economically than oil and gas. Our future is in the hands of engineers.