Inextricably Intertwined: Canada and the United States as Global Partners in Securing Safe, Reliable, and New Sources of Energy
Session Chair--David Crane
MR. CRANE: Thank you. I would like to welcome everybody to this panel. We have two very distinguished panelists and I know they will help us successfully launch this day and a half of discussion.
I would just like to start off, though, by making two or three comments to provide a little bit of context which went into our thinking as we started planning the Conference.
First of all, we wanted to underline the point that energy is about much more than just energy. It is about national security, (1) It has to do with the exposure of our electrical systems to acts of terrorism. (2) It is about exchange rates in currencies. (3) It is about foreign policy, and our vulnerability to events in the Middle East and elsewhere. (4) It is about competition between evidence-based findings and ideology. It is about industrial restructuring and the impact on jobs, growth, and inflation. (5) It is about capital flows. (6) It is about the environment, especially climate change and clean air. (7) It is about research and development policy. (8) It is about economic philosophy: do you believe in simply relying on markets to decide how these things could be settled or do you favor a more interventionist type of policy where the public interest is clearly defined and regulatory policy, as well as incentives, are used to achieve public interest goals? (9) And so it is more than just about what we put in our gas tank or what turns on the light each day.
It is very interesting that in the United States trade deficit last year oil accounted for more than fifty percent of the trade deficit. (10) Everybody focuses on China and its manufacturing exports and there is a lot of China bashing that goes on. (11) But if the United States really wanted to improve its current account situation, it could be much more effective by addressing the issue of oil imports. (12) If we look at the price of oil today, it is over one hundred dollars a barrel. (13) At the International Monetary Fund and many of the economic policy-making groups, the assumption is that, going forward, oil is going to remain above one hundred dollars a barrel. (14) That is very expensive and has huge implications.
This year for the first time it is estimated that the Organization of the Petroleum Exporting Countries ("OPEC") export revenues will exceed a trillion dollars. (15) Think of that going forward year after year: the countries in OPEC are generating more than a trillion dollars in export revenues. (16) What is that going to mean for financial markets, for exchange rates, for capital flows, all of these kinds of things? It has huge implications for the United States dollar and its future role.
We have issues about climate change. (17) How do you deal with climate change if so much electricity is coming from coal and we are relying so heavily on oil?
In a way, and this brings me to Canada, the issues of energy policy and climate change have fallen a bit off the headline radar. In our election campaign, which is underway now, there is virtually no discussion of energy policy or climate change. (18) Nobody wants to talk about it. I think that is partly an outcome of the serious recession that we have been through. (19) We have been much more focused on how do we prevent the next Great Depression, how do we restructure our banking systems, and now, how do we deal with the ongoing problems of unemployment and fiscal deficits, and these kinds of things. (20) But the climate change issue is going to come back. There is no question about that.
Canada's Constitution (21) affects the way we discuss energy in Canada, because electricity, for the most part, is a provincial matter. (22) In Ontario, we are going to have an election this fall. (23) Electricity will be a huge issue. (24) Pricing, the role of nuclear power, and the role of renewables are going to be very much at the front of stage, (25) but they are not an issue in the federal campaign. …