The fireworks are over (except for a few noise merchants in my neighborhood for whom “summer” is fireworks season), the flag-waving parade-goers are back home, and in the worst of all days possible, the Fourth of July fell on a Monday, so July 5 is a back-to-work day.
As Americans, we know how to celebrate our holidays, but we aren’t nearly as good at extending them.
In that context, the media’s coverage of what is quite properly an engineering milestone — the expansion of the Panama Canal to accommodate the world’s larger cargo ships — was all about business, all about commerce, and virtually all about the unmitigated benefits of increased export trade from the United States to Asia that a wider canal is projected to accommodate.
- The Washington Post noted that, “Fireworks exploded as a huge container ship made the first passage through the expanded Panama Canal [last week], heralding a new era for one of the world’s great marvels of engineering. The new shipping lane allows passage for ships that carry as many as 14,000 truck-size containers, long steel boxes that can be filled with a wide range of items, such as cars and clothing.”
- USA Today gushed that, “Exports of U.S. liquefied natural gas stand to benefit substantially from the $5.4 billion expansion of the Panama Canal, which will lead to much shorter travel time and much lower costs for shipments from the Gulf Coast to big markets in Asia and South America. Citing a new report from the U.S. Energy Information Administration the article suggested that “wider and deeper navigation channels and larger locks mean the canal can accommodate 90% of the world’s LNG (liquid natural gas) tankers, including vessels that hold as much as 3.9 billion cubic feet of the fuel.”
- The Christian Science Monitor, while reporting that the Panama Canal previously allowed “just 6% of the current global fleet of LNG tankers,” the expanded canal would “reduce travel time and transportation costs [to] help United States natural gas exports to northern Asia.”
- Bloomberg’s report, while reporting that “an expanded Panama Canal that could see 550 LNG tankers a year by 2021,” estimated that the shortcut would “shrink travel times for ships carrying [natural] gas from U.S. shale fields and encourage utilities and traders who have reserved liquefaction capacity to actually use U.S. plants.”
Other media outlets projected new opportunities for agricultural exports passing through the canal, while acknowledging that West Coast ports would still have a cost advantage shipping commodities to Asian markets.
As for how the Panama Canal initially came to be constructed, I guess we’re not supposed to discuss its origins, so close to a patriotic Fourth celebrating American exceptionalism. But as the website UShistory.com phrased it, when “negotiations” failed with Columbia, across whose territory the failed French engineering attempt to cut a canal had been conducted in the 1880s, then-President Theodore Roosevelt “acted quickly.”
“When Colombia grew reticent in its negotiations, Roosevelt and Panamanian business interests collaborated on a revolution,” the reference article stated. “The battle for Panama lasted only a few hours. Colombian soldiers in Colón were bribed $50 each to lay down their arms; the U.S.S. Nashville cruised off the Panamanian coast in a show of support. On November 3, 1903, the nation of Panama was born.”
The rest is history, including the outrage generated when President Jimmy Carter signed a 1977 treaty that returned control over the Panama Canal in 2000 back to the country that we created to obtain American rights to build the canal in the first place.
The expanded canal will certainly generate increased trade, but not necessarily the exports that support agricultural productivity. Most of the increased trade that will flow through the new Panama Canal will consist of commodity exports of natural gas, fuel oil and petroleum-derived chemicals.
As domestic natural-gas production has surged, thanks to a boom in fracking activity — which carries its own set of risks — the wider, deeper canal will be used by the newer generation of super tankers transporting LNG to China and other Asian markets.
Is that a good thing? Should we accept without question that it’s a wonderful development for the United States to sell off what’s left of its fossil fuels — particularly cleaner burning natural gas — so that low-wage countries have the cheap energy they need to continue displacing the American manufacturing economy?
Plus, the new Panama Canal will expedite transport of all kinds of value-added manufactured goods back to East Coast and Midwest markets, which won’t help the U.S. trade deficit, now hovering around $530 billion a year.
Most of that deficit is the result of U.S. imports of drugs, consumer electronics, clothing, and household goods (a $397 billion deficit) and cars, trucks and auto parts (a $197 billion deficit), offset by the value of our commodity exports of gas, oil, food and feed crops.
I’ve sat through many a presentation documenting U.S. job growth in advanced manufacturing, which is sustained by export sales; documenting the projected population growth and marketing potential of Asian and Latin American markets; and discounting the economic impact of annual trade deficits that show no signs of receding.
Who am I to question economists, trade officials and academic exports?
But in the end, the shorthand for how to categorize a Third World economy is a country that exports its natural resources for use elsewhere, and spends its capital importing the manufactured goods needed by its population.
In reading between the lines of the media hosannas for the new Panama Canal, that definition is coming disturbingly close to home.
The opinions expressed in this commentary are solely those of Dan Murphy, a veteran food-industry journalist and commentator.