By Mike Hoff, Hussar Innovations
Let’s say you’re the leader of a democratic, resource hungry nation, who needs to approve or reject pipeline construction with your cordial neighbor—you know, theoretically.
It’s clear your country needs to import petroleum products to fuel economic growth, directly for your transitioning energy industry and indirectly for the nation at large.
On the one hand, you have a pro-environment agenda, a populist presidential mandate and a “we the people” legacy to leave behind. You have states gearing up for a long legal battle to stop you—either way you decide—and heavily armed green lobbyists sharpening their blades. Any bill you approve with the words “energy” or “economic sustainability” will fuel (pun) your Republican enemies, and potentially handicap your party’s successor.
On the other hand:
- Despite the shale-gas boom, energy prices worldwide continue to rise;
- Petroleum products are a major factor in economic growth and will remain so for decades to come;
- Industries in key states sit idle or underutilized—in part due to your government restrictions in the Gulf of Mexico;
- Green technology—creation and distribution—hasn’t keep up with demand or must be imported from cheaper sources, increasing foreign debt;
- Players in Venezuela, Iraq, Iran and other Arab states would as soon incinerate your homeland then begrudgingly sell you another drop and
- Friendly suppliers in Saudi Arabia and Qatar have questionable human rights regime in place (e.g. enslaving and discarding east Indians to construct soccer stadiums).
And most significantly, a former ally has just made a major military play in a volatile region rich with coal, petroleum and even solar resources. Key European partners, afraid of being held hostage to high prices and frequent shortages, are scrambling to tap new sellers and revisiting liberal energy-use doctrine (e.g. dismantling nuclear energy plants).
Your global competitors often have no qualms about the environmental impact of their economic growth—one of them is a worse polluter than you. Efforts to be a beacon of green energy use and sustained growth fail to sway foreign investors and global banks, squeamish about another recession. Your country can no longer persuade and/or force UN colleagues to refrain from strip-mining, uphold international shipping regulations, or restrict worker exploitation in pursuit of natural resources.
True, the actual economic impact of this intercontinental pipeline is ill-defined, depending on who you believe, and may not provide the national ROI you hoped; however, rejection will add zero jobs to a stagnant economy and an increase in tertiary, unreliable shipping across the transportation grid.
And your northern neighbor, although bereft of political, economic and even religious turmoil will happily sell its unrefined product to your competitors—well, if they can figure out an environmentally friendly way to ship the stuff.
So, in this theoretical situation, what do you as the leader of your nation do? Apparently, you delay.
Mike Hoff is a senior consultant for Hussar Innovations.
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