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Oil is a vital commodity. And because it's vital, every barrel is political. So, more than anything, politics will continue to dictate the price of oil. In North America, it comes down to the question "Is the pen mightier than the pipe?"

Here in Canada, we are all acutely aware of our federal and provincial oil geopolitics. The recently announced consensus on "five conditions" between Alberta Premier Alison Redford and B.C. Premier Christy Clark was a welcome package of politics in the seemingly un-navigable quest to build a western oil pipeline to B.C. port facilities that can serve Asian markets. Yet over the next several years, it's not clear whether the greatest influence on the worth of Canadian crudes will come from the stone halls of Canadian parliamentarians, or from decisions taken (or not taken) in the White House.

Oil is a peerless fuel with compelling utility not lost on the military. As such, the politics of oil go back to before the First World War, when Winston Churchill – then the First Lord of the Admiralty – made the decision to switch the coal-shovelling British Navy to diesel fuel. This astute move was a prime reason why the allies were said to have "floated to victory on a wave of oil." Over the course of the war, petroleum-hungry Germany couldn't power its military effort with the same finesse and flexibility as the allies, and lost as a consequence. By the end of the Second World War, the strategic value of oil was so well recognized that Americans adopted a tacit policy of using other peoples' supplies first, before depleting and exporting their own. That thinking was a big reason why Middle Eastern reserves were developed, and why global supplies have been periodically antagonized over the decades since. Put together, all these factors have contributed to the legislative ban on U.S. oil exports, enforced to this day.

Recently, news reports have emerged that the American Petroleum Institute (API) is beginning a major lobby effort in Washington to tear up the export ban and open up U.S. oil to foreign markets. The objective will be to repeal the 1975 Energy Policy and Conservation Act, instituted after the infamous Arab oil embargo. But given the geopolitical history of oil, changing entrenched attitudes and associated policies will be difficult in the U.S.

Sharing domestically pumped barrels for the direct or indirect benefit of emerging military powers like China will be a decision that American lawmakers will not take lightly. And then there will be the whole debate about whether exporting oil will cause higher gasoline prices. Realistically, the cost of filling a tank is unlikely to change, because gas and diesel are unrestricted and already part of global trade. However, the optics of allowing cheaper domestic oil into higher-priced global markets is not a story that will be easily digested by a public that is hyper-sensitive to pump prices and long skeptical about industry motives.

North America is increasingly awash with "unconventional" oil coming from up and down the spine of the continent, from Texas to North Dakota, all the way up to the Alberta oil sands. Depending on location and oil quality, discounts to global benchmarks, like North Sea Brent, range from $10 to $40 a barrel, and are threatening to widen further as flush producers open spigots and flow their production to coastal refineries any way they can, via new pipelines and 100-plus tank car trains. But even though transport bottlenecks within the continent are easing, oil is starting to fill up in North America behind a dike of American policy and Canadian infrastructure constraints.

Looking ahead, all Canadian and U.S. oil producers will be hostage to volatile price discounts until surplus supplies can be released into global markets. North of the 49th parallel, despite some conciliatory political chatter, it's not likely that there will be a meaningful made-in-Canada outlet like Northern Gateway or Energy East for at least five years (note that Keystone XL has no bearing on this issue). In the U.S., the barrier is not a dearth of steel pipes, but a lack of a signature on a piece of paper. So it's not clear which will have greater might in solving this growing problem: The pen or the pipe.

Peter Tertzakian is chief energy economist at ARC Financial Corp. in Calgary and the author of two best-selling books, A Thousand Barrels a Second and The End of Energy Obesity.