The Strathcona Refinery, owned by Imperial Oil, in Strathcona County near Edmonton. Photo by Ian McKenzie/Flickr.
Can Canada insulate itself from oil volatility caused by Trump’s illegal bombing of Iran? Experts say no. History says yes.
Iran’s retaliation is disrupting global oil flows, pushing gasoline prices higher and leaving Canadians wondering why they’re so exposed. Doesn’t Canada produce enough oil to meet its own needs? It does. Could it set its own prices? It could. The real issue is reliance on imports—78 percent of which come from the United States—leaving Canada vulnerable to external shocks and political pressure.
Governments in Canada remain overly influenced by Big Oil. Much of the sector is foreign-owned, and no major company has been majority Canadian-owned since Suncor acquired Petro-Canada in 2009. Their priority is profit, much of which flows abroad. Securing affordable domestic supply is not their mandate.
Canada also has no plan for oil shortages in Atlantic Canada. This is a serious oversight. Newfoundland and Labrador produces ample oil, yet little of it is used locally. Most is exported. In the midst of a global supply crisis, that leaves residents exposed.
Refineries in Atlantic Canada still import most of their oil. Ottawa could require that Newfoundland production replace those imports. The province could meet roughly 85 percent of the region’s current demand, and within four years—if output doubles—it could supply all of Atlantic Canada and eastern Québec.
Meanwhile, Western Canada, Ontario, and western Québec, including Montréal, already rely largely on Western Canadian oil.
Redirecting Newfoundland oil would be far quicker and cheaper than building a 4,600-kilometre pipeline from Alberta to New Brunswick. Refineries would need to retool to process Newfoundland crude, but it is feasible. Export contracts with the United States would also need to be renegotiated on national security grounds.
Whenever a wars breaks out, journalists call because I wrote a report in 2008 calling for Canadian strategic petroleum reserves (SPRs). Why doesn’t Canada have its own? My report got play, but Harper’s government didn’t budge. Neither did subsequent Liberal governments. We could sure use them now.
War is precisely when strategic petroleum reserves should be used. The other 31 member countries of the International Energy Agency either maintain such reserves or require oil companies to hold emergency supplies. Even major exporters like the United States and Norway do so. Canada remains the only holdout.
The year before my report, I gave expert testimony to a parliamentary committee on a proposed North American “Security and Prosperity Partnership” (SPP). Harper’s Conservative government backed the SPP to further integrate our energy with the US.
I don’t understand, I began, why Canada wants to help American energy security when Canada has no plans to get oil to eastern Canadians during an international supply crisis. Canada is the most vulnerable member of the International Energy Agency (IEA). Leon Benoit, Conservative Party chair of the parliamentary committee, cut me off halfway through my testimony. My call for a Canadian SPP—Secure Petroleum Plan for Canada—was off-topic.
MPs on the committee challenged Mr. Benoit’s ruling. After banging down his gavel—“Meeting adjourned,” he intoned—he stormed out of the room.
Their SPP died due to Canadian protests and the 2008 global financial crisis. So did my Secure Petroleum Plan.
With Trump’s “51st state” threats, it’s time to revive it.
Can we have a made-in-Canada oil price? Pundits say we are too small a player.
Really? We did it when we had half the population.
John Diefenbaker’s Progressive Conservative government brought in the National Oil Policy (NOP), mandating that Westerners and Ontarians use Alberta oil. Their consumers paid above the international price, subsidizing Alberta’s oil industry. It’s a story Alberta separatists don’t retell.
The NOP lasted a year longer than the National Energy Program (NEP) and its predecessor that instituted a Canadian oil price below the global one. We could do it again.
As Trump wages economic war to break Canada, let’s go for Canadian energy security and independence. Strategic petroleum reserves must be part of it. The Iran war shows how risky reliance on oil is. As the world shifts off fossil fuels, the challenge is to build Canadian energy self-reliance around affordable domestic renewables.
Gordon Laxer is emeritus political economy professor at the University of Alberta and author of the 2008 Parkland Institute report Freezing in the Dark: Why Canada needs Strategic Petroleum Reserves.
An adapted version of this article originally appeared in the Toronto Star.