As recently as the 1990's, natural gas was thought to be a scarce commodity in North America. In fact, the U.S. actually banned its use in power generation to save it for more valuable uses such as heating homes. Recently though, the application of hydraulic fracturing, (fracking) techniques has vastly increased both the output and estimated reserves of natural gas in Canada and the U.S. What is particularly interesting is the completely divergent views between the U.S. and Canada as to how to make the most of this newfound bounty of natural gas. In the U.S., it is seen as both a way of securing energy independence while at the same time acting as a lever to revive the manufacturing sector. In Canada on the other hand, we see it as another surplus product to be exported to countries where it is needed the most.
Canada has a long history of exporting its natural resources. In Canada's early days it was cod and beaver pelts that we exported to Europe. Then, as economic power shifted to the U.S., we we exported commodities such as lumber, metals, and oil to our neighbours to the south. Now, as Asian economies are rising, it seems only natural that we sell them commodities we currently have a current surplus such as natural gas.
The concept of energy security is not well known in Canada. That is because we are fortunate enough to have so much energy resources that we will never be dependent on foreign countries for our energy needs. However, energy security is a strong driver of energy policy in countries that are not so fortunate and must import energy from often unstable countries. Nowhere is this more true than in the U.S. Richard Nixon was the first president to state that the U.S. should strive for energy independence. Since then, every president has repeated this pledge but none has achieved it. However, there is a real possibility that the current boom in natural gas will allow the U.S. to achieve their long sought goal of energy independence. This is one of the main reasons why the U.S. is reluctant to export any natural gas.
Both Canada and the U.S. used to have strong manufacturing centres, in Ontario and the Midwest respectively. The sector has fallen on hard times in both countries, largely due to lower labour costs in third world countries. Energy costs however, which are a significant production cost in manufacturing, are rising in third developing countries. There are many in the U.S. who would like to see their natural gas surplus used to shift the manufacturing cost advantage back to the U.S., especially in energy intensive processes such as chemical processing. There doesn't seem to be the same drive in Canada to use our excess oil and natural gas to revive manufacturing in Ontario. I suspect this is because in Canada, natural resources are considered a provincial matter. For example, I cannot see Alberta being too eager to have its energy resources used to help out Ontario's manufacturing sector.
Canada and the U.S. are both experiencing a natural gas renaissance. However, because of our different energy histories and political systems, we are using that natural gas to achieve different goals. Here in Canada, we hope to continue our traditional role as natural resource exporters and sell our excess natural gas to Asia. In the U.S. on the other hand, they hope to keep the natural gas within their borders in order to revive a struggling manufacturing sector and perhaps finally achieve their long sought goal of energy independence. To each their own.
