Oil is incredibly important in the global political economy. Private oil companies, many of which receive behind-the-scenes government support, play influential roles in oil's supply chain all the way from reserve extraction to refining to distribution. Oil has remained the pre-eminent energy supply for decades due to its prevalence in a vast number of products, from Raytheon missiles to clothes and ice cream. What's more, several of the largest oil companies--Exxon Mobil, Royal Dutch Shell, BP, and Total--engage in "alliance capitalism" to gain an even larger hold on the market. However, it remains unequivocally true that certain sources of oil are cheaper to extract than others. In the context of America's recent quest for oil independence, this reality is particularly important.
It seems so easy: stop buying oil from the Middle East and start developing oil fields at home. Unfortunately, it's not that simple. America lacks the infrastructure necessary to effectively transport crude oil to Western and Eastern markets. Although domestic oil refining has dramatically increased in such states as North Dakota and Texas, production is currently being transported via rail, which is must slower and much more expensive than through pipeline. If you've seen any coverage of North Dakota's oil industry, images of freight trucks, "man camps," and temporary housing projects were probably common. The region is experiencing a remarkable economic transformation. North Dakota and Texas were some of the only states to experience positive growth rates during the 2008 economic recession. But, how will investments sustain themselves in the face of tightening supplies? One viable solution has been Canada. The State Department recently concluded that the Keystone XL pipeline would not significantly add to global greenhouse gas emissions. The Alberta tar sands oil would have made its way to America without the pipeline. Although the proposed pipeline is one step to diversifying energy supplies at home rather than abroad, as long as infrastructure lacks, energy independence will be difficult to achieve for the foreseeable future.
America is immature if she is to call herself energy independent. I use the word immature for the following reasons: the U.S. will have to cooperate with Stephen Harper, Canada's PM, over development of the XL pipeline, meaning America will not have complete control over the project; oil in Saudi Arabia, Iraq, and Iran is cheaper to extract and thus will remain attractive relative to more expensive, unconventional projects in the Arctic and the American South; Washington has spent the good part of the last half-century cementing the dollar as the global currency to facilitate American capitalism and to encourage outsourcing ExxonMobil, Chevron, and ConocoPhillips oil; and environmental lobbyist groups will be hell-bent on preventing chemically-infused pipelines from crisscrossing the Midwest.
In the end, America will choose ease over cost.