Outpricing the US should not be a concern for Icelandic politicians, as they are to care for the people of Iceland, not the people of the USA. And according to Ricardo and his comparative advantage, everyone is better off if the stuff is made where it is cheapest to make it.

Still, all of this is put on it's head if foreign labor is needed to run the aluminium plants.

Why don't Icelanders want the jobs, and why was all the infrastructure built if just to get import foreign workers to a remote part of Iceland?

Or to put it another way: what's in it for Iceland?

Peak oil is not an energy crisis. It is a liquid fuel crisis.