Monday, January 26, 2009

US Energy Policy Has World Impacts

Today President Obama signed two important energy-related Executive Orders (EOs) as he declared a national goal of ending dependence on foreign oil and promised new U.S. leadership in the fight against global warming. With new Secretary of Transportation LaHood and new EPA Administrator Jackson looking on, he ordered a series of steps aimed at making American cars more fuel efficient and reducing greenhouse gas emissions.

These and forthcoming EOs and other Administration actions will no doubt have an impact on the way energy is used in the US. Obama has promised that "It will be the policy of my administration to reverse our dependence on foreign oil while building a new energy economy that will create millions of jobs."

But his actions will have impacts in many other parts of the world. For example, the oil industry in Alberta, Canada is wondering whether the shift in focus will mean less oil imports from Canada to the US. Currently, Canada is the single largest foreign supplier of energy to the U.S.--providing 17% of U.S. oil imports and 18% of U.S. natural gas demand. The change in US policy is making some companies think that they should emphasize that they are "energy" companies and not just oil/gas companies.

The US change in focus will also impact the balance of power in the world, an issue that hasn't been fully examined in the public media yet. The intention, of course, is to reduce our dependence on oil from the Middle East, Venezuela, and other political hot spots around the world. All one has to do to see the impact of this is to look at the increased political power gained by Iran, Russia and others when oil prices soared, then the rapid decrease when prices dropped again. True, other factors including the Iraq war and the global economic crisis also affect this trend, but there is no question that reduced demand from the US will change the political dynamics of many regions. But countering that is the rise in energy demand from China and India, who will likely soak up any reduction in US demand. That is why the US energy policy must take into consideration international interconnections, and why the US must become a global leader in ushering in a new era of sustainable energy policy worldwide.

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