When talking about U.S. oil imports, attention inevitably turns to the Middle East. And why not? Of the top 15 oil producers in 2009, six nations were in the Middle East or North Africa, including Saudi Arabia, the world’s second largest producer, and Iran, the fourth.
By the way, number one was Russia, and the U.S. was number three.
But from where do U.S. oil imports come? The top two sources are Canada and Mexico, followed by Saudi Arabia, Venezuela and Nigeria. That’s right, just one nation among the top five that export oil to the U.S. is in the Middle East. In fact, our oil imports from Canada not only are nearly double the level of imports from Saudi Arabia, but we import more oil from Canada than from all Persian Gulf nations.
While oil is priced in a global market, if concerned about the stability of where the U.S. gets its oil, then it should be very good news that our neighbor to the north is our number one source.
The news gets better considering investments that TransCanada is looking to make in its Keystone pipeline.
The Keystone pipeline reaches from Alberta, Canada, to Cushing, Oklahoma. The proposed next phase of the pipeline would extend to Port Arthur, Texas, on the Gulf Coast. According to various reports, the system’s capacity would be boosted from 590,000 barrels of oil per day to 1.1 million.
The American Petroleum Institute (API) noted: “TransCanada estimates that this project will create 13,000 organized labor jobs and hundreds of thousands of additional jobs… More than 342,000 new U.S. jobs are likely to be created between 2011 and 2015 because of Canadian oil sands development, according to a study by the Canadian Energy Research Institute.”
Investment, jobs and energy from a reliable friend – that’s a win-win-win. It certainly would be a plus for U.S. entrepreneurs, small businesses and consumers who need affordable, reliable energy to run their enterprises and homes.
Of course, though, various environmental activists, along with their political allies, oppose the project.
Extending the pipeline was projected to cost $12 billion, though that was recently increased to $13 billion given the U.S. regulatory delays.
This is a serious test for the Obama administration, specifically, the State Department. Will clear U.S. benefits in terms of boosting the supply of reliable energy win out, or will it fall to the wishes of special interests that oppose any and all efforts to expand the supply of fossil-fuel-based energy?
By the way, as questions swirl and the U.S. delays, The Wall Street Journal reported on February 4, “If the U.S. keeps blocking attempts to ship Canadian crude southward, Canada will supply China through a West Coast pipeline instead, analysts say.”
Let’s hope the Obama administration gets this one right. A decision is expected from the State Department before mid-year.
Posted by: Raymond J. Keating, Chief Economist, Small Business & Entrepreneurship Council.