Keystone, Canada and some facts about oil

The first vote I ever cast in my life was for Brian Mulroney's Progressive Conservative Party in 1988. The federal election was based on one issue, whether Canada should enter into a free trade agreement with the United States. If the circumstances today were the same as they were 24 years ago, I wouldn't hesitate to vote the same way again, but they aren't.

I first wrote about my support of Canada's withdrawal from NAFTA back in 2005. As it happens, the American political system makes it singularly incapable of living up to its treaty commitments. A single senator, or a group of them, can decide that free trade isn't in the economic interests of their constituents and force the administration to violate a treaty.

American presidents like to say that there's little that they can do from stopping their legislature from essentially abrogating a treaty that they themselves ratified. It arrogantly presumes that the other party to a treaty should actually care about U.S domestic politics, which it really shouldn't. A treaty is just that, a treaty. If American lawmakers can't bring themselves to live up to the laws that they've passed (which treaties are - apparently, so long as they don't involve torturing folks), then they have no business ratifying those treaties in the first place.

The fact is that the Clinton, Bush and Obama administrations have repeatedly violated NAFTA without consequence, most egregiously during the softwood lumber dispute. The United States government essentially stole $5 billion from Canadian softwood exporters, which was ruled illegal no fewer than three times by the NAFTA arbitration panel and the World Trade Organization. As this was happening, the Bush administration also imposed steel tariffs that even they didn't deny were illegal and served no other purpose than a spectacularly failed manoeuvre to win Pennsylvania in 2004.

After the third ruling, President George W. Bush said that the matter needed "further negotiation." This is a fairly unique thing to hear from the American government, whose Supreme Court has held that evidence of actual innocence isn't enough to overturn a criminal conviction, including one that carries the death penalty. Bush, who carried out a record number of executions as governor of Texas, didn't seem particularly willing to negotiate after those convictions were brought down.

For reasons that still don't make sense, Stephen Harper decided to roll over and give the United States everything it wanted upon his election as prime minister in early 2006. Even though Canada won, we still managed to lose. It was tantamount to economic treason, and one of the many reasons that I've refused to ever support the Conservative Party under Harper.

The Obama administration later abused Harper's capitulation by including an illegal "Made in America" provision in their 2009 stimulus bill. However, anyone who has paid attention to the Democratic presidential primaries since 1992 knows that Democrats, especially the more liberal ones, aren't ideologically committed free traders. They're more pragmatic, willing to exploit their union stooges for votes, then go for the real money that free trade provides.

Free trade requires basic honesty to to succeed. Unfortunately, as I said back in 2005, the United States is to honest free trade what Saddam Hussein was to transparent weapons inspections. If Canada weren't run by such nutless wonders for the last decade and a half, we would've withdrawn from NAFTA.

The 1989 Free Trade Agreement made sense because there was no end in sight for America's economic dominance and the country had a reputation of electing adult presidents whose word could be trusted. Neither of the above have been true for at least a decade now. The last president I would trust to stand up to the reprobates in Congress on behalf of a legally binding treaty was George H.W. Bush, and he's been gone for awhile now. The last three American presidents have had trouble abiding by U.S law, let alone international obligations.

Given their history with free trade, the Republican party and their lapdog "conservative" pundits are the last people who should be lecturing anybody about anything. On the other hand, they seem to really enjoy lying and have come to be Olympic gold medallists in it.

Which brings me to the Keystone pipeline project, which is inspiring all kinds of new and breathtaking levels of dishonesty from what passes for the Right in the United States these days.

Republicans think that Canada is pissed at the U.S because Obama temporarily (and anyone who knows anything about politics knows that he's going to reverse himself immediately after the election) deferred Keystone's development. To be fair, Prime Minister Harper is dissembling mightily himself, in ways that I'll explain soon, mostly because he likes interfering in foreign elections.

Because Rupert Murdoch is essentially the foreign-born head of the GOP (when he isn't being distracted with the prospect of prison time in England), his newspapers are an excellent resource to research and debunk the party's talking points.

President Obama must be planning to skip this year’s presidential election and run for prime minister of Canada instead.

Why else, after all, would he be working so hard to help Canada open new markets for its oil outside the US and attract higher prices — even as motorists here are increasingly socked every time they fill up their tanks?

This of course ignores why oil prices are what they are. There are four reasons why everyone is getting gouged.

First, is increased demand, both in the United States and in India and China. Republicans, their rhetoric aside, don't seem to understand that when demand approaches supply, prices increase.

Canadian oil will be on the world market whether Keystone is built or not, so it won't affect price in any significant way. Keystone is the delivery system for a resource, not the resource itself. By the way, where do those people think they've been getting most of their oil for the last decade, anyway?

Then comes the futures market, which responds to world events and trends to determine price. Since the GOP displayed its obstinate refusal to regulate those markets in any way, shape or form in the immediate aftermath of the financial crisis, it's hard to see how they expect Ottawa to help them.

One of the things that drives market speculation are the continuous threats by Republican ward-heelers to bomb, sanction or otherwise disrupt the Middle Eastern countries that produce most of the oil in the first place. I might be the only person who notices this, but the price of oil was considerably lower before the United States tried to turn the Muslim world into a swarthier version of Kentucky.

Finally, oil is a commodity that is traded in American dollars. Since George W. Bush became president, the value of the dollar has been cut roughly in half. Economists will tell you that when a currency loses value, it takes more of it to buy a product. Of course, Republicans can't tell you that because someone might point out that the dollar crashed and the cost of oil skyrocketed before Obama's election, and that fucks with their narrative.

Two of the major factors in price involve capitalism and the third is controlled by a completely voluntary, if wildly counter-productive, foreign policy. They have nothing at all to do with where you drill, how much, or how much you want to pervert the tax code to facilitate said drilling. And it doesn't have anything to do with Keystone or Canada.

The GOP demagogues out there are pretending that all, or even most, of this oil is destined for American cars, which it isn't.

Look at a map of the Keystone route. Notice that it ends at the refineries on the Gulf of Mexico? Those refineries are there for a reason, teenagers.

You see, the United States used to produce 50% of the world's oil. The oil would drilled, refined, and then shipped to foreign markets. Because building refineries is expensive and an environmental challenge, foreign producers now ship their crude to the Gulf of Mexico, where it refined and either sold in the U.S or shipped right back out.

Even with domestic prices where they are, a good percentage of American oil is still being shipped overseas for world consumption. What makes anyone think that the Alberta tarsands oil - which is mostly refined before leaving Canada - will be any different?

Harper, in Washington, cited Obama’s decision to kill the project, which would’ve created 30,000 American jobs along its path. He said the decision is forcing Canada to look elsewhere for customers.

No doubt, China, in particular.

“The very fact that a ‘no’ [to Keystone and Canada’s oil] could even be said underscores to our country that we must diversify our energy-export markets,” Harper said.

Diversification means new sales prospects for his country and can also allow it to make more money by raising prices.

As Harper explained: Canada takes “a significant price hit by virtue of the fact that we are a captive supplier” to the US — bound by treaty to provide much of its oil to its southern neighbor, even if other bidders are willing to pay more.

But what if Washington won’t take the oil?

“We cannot be . . . in a situation where really our one and, in many cases, almost only energy partner could say no to our energy products."

Harper's position is what is what trade experts commonly refer to as "horseshit."

Obama's not saying "no" to the oil. He's saying no (again, temporarily and for cynical political reasons) to the means of transporting the oil. In the decade since the Bush administration's destruction of the U.S dollar finally made tarsands oil profitable, that oil has been getting to the American market just fine.

As the Prime Minister pointed out in his back-handed and highly disingenuous Rose Garden remarks, Canada is "captive supplier." Or as the New York Post helpfully notes, we are "bound by treaty", specifically NAFTA, which requires us to supply the U.S even if we didn't have enough to service our own market, and it requires us to do so at a discount. Most Canadians are probably blissfully unaware that the same applies to fresh water.

It's an enormous logical leap on the part of Harper, the Post, and GOP dickheads everywhere that refusing Keystone constitutes a liberation of Canada from our treaty obligations. I - and honest people who have a reputation for knowing what they're talking about - can't believe that the NAFTA arbitration panel or the WTO would see it that way either.

Don't get me wrong. I wish that they would because that could be a predicate for Canadian withdrawal from NAFTA once and for all. We would then be able to diversify our economy on the international market and free ourselves from an increasingly bankrupt United States and its atavistic asshole politicians.

Republicans are now doing what the Democrats did for a generation, using a trade agreement that was signed twenty five years ago as a campaign season tool. Well, one of the reasons I originally wanted to get out of NAFTA was because I was exhausted by the Democrats doing that. The fact that the GOP has gotten in on the act means that it's never going to end. What both parties don't seem to understand is that their domestic political demagouging at home has the potential of causing economic instability here.

I also don't remember a choir of Republicans taking Canada's side when President Bush was repeatedly raping us on softwood and steel. That would be intellectually consistent, and that's well beyond your average Tea Partier.

But it is awfully nice to see American conservatives applaud when a foreign leader goes to the White House and very publicly pisses on the shoes of the President of the United States. I trust they'll feel the same way when it happens to one of their guys.


For even more of this electioneering nonsense, please go to Red State and read the ramblings of some guy named Repair Man Jack.