Here’s a story (via the Arab News) that’s worth looking at more closely:
In an interesting tussle, a virtually unnoticed clause was added almost at the least moment to a US energy bill that bars the government, in particular the Department of Defense, from using Alberta crude because it is deemed unconventional and too dirty. A provision in the US Carbon Neutral Government Act incorporated into the Energy Independence and Security Act of 2007 act effectively bars the US government from buying fuels that have greater life-cycle emissions than fuels produced from conventional petroleum sources. The United States has defined Alberta oilsands as unconventional because the bitumen mined from the ground requires upgrading and refining as opposed to the traditional crude pumped from oil wells. California Democrat Representative Henry Waxman, chairman of the House Committee on Oversight and Government Reform and Republican Tom Davis added the clause.
I’d expect nothing less from Waxman, but the participation of Tom Davis is worth noting. The Canadians are pushing back, which is no great surprise, but more interesting is what the Saudi dictatorship has been up to:
Some analysts, however, are claiming that the clause was added after some political maneuvering by Saudi Arabia as it is “increasingly threatened” by Canada’s growing market share of oil production.Strategic resource analyst Paul Michael Wihbey recalling the November OPEC summit, said it was then that for the first time Saudi Oil Minister Ali Al-Naimi “took a swipe at the oilsands.” He claimed the minister then said “Canada is one of the world’s costliest oil producers and requires high prices to remain viable.” Al-Naimi had suggested the Saudi product was a better value for investors, claiming, it costs $40 to $60 a barrel to produce the oilsands crude from the massive reserves. Wihbey underlines Saudi Arabia and Canada were direct competitors for the biggest customer: the US. David Kirsch, head of Oil Markets PFC Energy, says that “In the US mid-continent, the penetration of oilsands crude is deep, they are increasingly competing with the long haul crude from the Middle East. Until recently we saw a Saudi domination, but now it is becoming a Canadian affair.” And that’s why the Saudis are starting to play hardball, claimed Wihbey. “They’re playing hardball … then all of a sudden this legislation pops in, literally a month after these statements were made in November,” noted Wihbey.
If this is accurate, it’s yet another reminder that more often than not, when the Saudis clap, Washington jumps.