If you don’t like the Greens now, wait a decade and you might really hate them. That is because by then China could lock-down much of Canada’s oil sands production and be shipping it across the Pacific to power their 21st century ambitions as the world’s only superpower. At the same time, America may be floundering because of acute energy shortages and or because we are under the thumb of Arab oil.
A couple of weeks ago China took a historic step toward reaching its goal to becoming a global resource powerhouse when it bid $15.1 billion (U.S.) to buy Calgary-based oil producer Nexen Inc.
The offer by state-backed CNOOC, Ltd., is the largest by any Chinese firm to purchase a foreign company. It is evidence that China wants to use Canada to fuel its global economic and military ambitions through strategically secure oil reserves — the same reserves the United States has been reluctant to tie down because environmentalists maintain oil sands damage the environment.
If the deal is approved by the Canadian government as expected, it will be the largest in a string of earlier acquisitions by Chinese firms in Canada’s oil sands sector. It would also be the second-largest deal ever in Canada’s energy sector and the sixth-largest takeover ever in Canada.
The Nexen bid was announced within hours of a $1.5 billion deal by China’s top refiner, Sinopec, Corp., to acquire a 49 percent stake in the North Sea operations of Talisman, one of Canada’s largest oil and gas exploration companies.
According to Bloomberg, China has funneled more than $53 billion into Canadian oil interests over the past 10 years, dwarfing the $31 billion or so the U.S. has invested in Canada.
China has been building on its long-term strategy to build partnerships in Canadian petroleum projects that will give it access to energy regardless of what happens in the Middle East; that volatile region upon which Washington is betting.
“The slogan of the Chinese government for their major companies is to go global,” said Richard Herd, the chief China economist for the Organization of Economic Cooperation and Development. “They are hoping they can earn better returns in resources in direct investment abroad than they can in investing in U.S. treasuries.”
That is a double assault on the United States that could find it desperately needs Canadian oil at the same time it must finance the Nation’s day-to-day operations by selling ever more billions of dollars in treasuries to Beijing.
Nexen and other Canadian companies like it could give China a stranglehold on Canada’s oil sands reserves; the third-largest recoverable crude deposits in the world.
Virginia Republican Congressman Randy Forbes, founder and co-chairman of the Congressional China Caucus, has long warned of China’s growing military and economic power. Forbes is worried by China’s latest bid for an increased presence in Canada’s oil sector, especially because it allows China to be “right off our coast,” Forbes told Reuters. Forbes pointed out the other obvious problem with the Nexen deal: For China, it secures Canada’s finite energy resources that could otherwise be made available to America.
Obama Bends To The Greens
“More than a foot in the door, this is a body in the door for the Chinese in the North American energy market,” Forbes told Reuters in July, slamming President Obama’s decision to delay approval of the Keystone XL pipeline, a project designed to funnel oil from Canada to refineries on the Gulf Coast.
Forbes and many other Republicans want Obama to immediately approve the pipeline to give the Canadians an alternative to doing business with the Chinese. That is not going to happen before the election and if Obama is reelected it probably will not happen. That is good news for Beijing whose global ambitions are built upon fossil fuels and not the fantasy of unproven clean energy.
In Canada, plans are being drawn up to move oil from Alberta west through British Columbia via a newly constructed Northern Gateway pipeline.
The Wall Street Journal summed up the situation on July 25th:
Mr. Obama’s rejection of the $7 billion Keystone XL has no doubt concentrated Chinese and Canadian minds. The pipeline would have moved oil from Canada and North Dakota to refineries on the Gulf Coast, and Mr. Obama’s bow to American greens was a direct snub to Canada, which provides nearly 30% of U.S. imports. Prime Minister Stephen Harper promptly said that Canada needs to diversify its energy markets, perhaps by building a pipeline from Alberta to the West Coast to export to Asia.
The lesson for America, and especially Democrats, is that Canada’s oil sands will be developed, whether their green financiers like it or not. If the U.S. doesn’t want the oil, China and the rest of Asia will gladly take it. The world wants to grow—must grow to reduce poverty—and it needs abundant, cheap energy to do it. Why is that so hard for some Americans to understand?
Canadians understand. After the rejection of the Keystone XL, Calgary-based Enbridge moved to the forefront with its $5.5 billion pipeline project that will carry Canadian oil sands crude to Canada’s west coast where tankers could transport it to Asian countries, none of which have a more critical need for oil than China.
This is China’s century. Every great power that has dominated has fallen into permanent decline. Why should it be any different for the United States which has insurmountable debts and an overstretched military? Just as those world powers rotted from within because of corruption and terrible leaders, so, too, will the United States.
Earlier this year East Asia Forum wrote, “China is now strong enough to contest America’s leadership in Asia, and is plainly doing so. That means the old days of uncontested American primacy, and the Asian order that has been built on this foundation, are already history.”
China is building a war chest not only for Asian domination but for global domination and a key component of it is buying up oil from America’s next door neighbor. Those reserves might be crucial to the U.S. someday but American Greens can comfort each other that they didn’t dirty up the environment… when they talk or text in Mandarin.
Yours in good times and bad,
Editor, Myers Energy & Gold Report