Ethical Oil, Part Two: The Trade

Al Shaybah Oil Field, Saudi Arabia

In part one, I introduced everyone to Alykhan Velshi and Zoe; two ideological zealots engaged in a war of words over the nature of Canadian oil production.

Velshi is the captain of the good ship Ethical Oil and Zoe is, of course, Ezra Levant’s fictitious and quintessential environmentalist.

So, not happy with having such an important debate boiled down to a never-ending back-and-forth of pontificating and self-righteousness, I wanted to know where our oil actually comes from.

Our underlying issue is one of supply and demand: Canadians are demanding oil, and we’re supplying it to the United States.

According to Statistics Canada, we export $400 billion in energy south of the border, which accounts for 100% of our energy exports. We do export about $200 million worth to Eastern Asia, which is about .05% of our total exports. There is some talk about creating trade to China, perhaps by way of underwater pipeline. That’s still a pipe-dream, as it were.

Included in that massive flow of energy is roughly 63 million barrels of crude oil that makes its way to the American East Coast. That oil probably comes mostly from Newfoundland.

Newfoundland natural gas refinery

Gordon Laxer is a political economist at the University of Alberta and author of the upcoming book, Freezing in the Dark. In that book, Laxer writes, “We know that 207,563 [barrels a day] of oil, about 60 percent of Newfoundland oil,  was exported to foreign refiners in 2008.”

That fact alone leads me to don a slicker and start the ‘Ethical Oil, B’y’ campaign.

It’s absurd that Newfoundland exports so much oil because the only part of this country reliant on oil imports is the East Coast. Canada imported oil to the tune of 280 million barrels in 2010, $24 billion-worth, going almost entirely to the eastern part of the country. If you live anywhere east of Sault Ste Marie, chances are you’ve never burned a drop of Albertan oil. You may have, however, used Albertan natural gas, which reaches as far as Quebec City via pipeline and is dispersed via tanker truck. Under Trudeau, that pipeline stretched to Montreal.

Our oil pipelines, however, tend to flow north to south.

Levant has a novel idea on how to fix this.

“If gas stations had country-of-origin labeling, it would allow consumers to favour ethical oil sources – or not. But at least they would have the choice,” he says.

There are a few problems with that, of course, but I think Ezra’s plan is one part thought experiment and one part niche marketing. Perhaps folks like him would have their oil flown in from Fort McMurray. I don’t think any middle class families want to be paying more at the pump.

But the absurdity of our trade relationship doesn’t end there, because it’s not just oil we’re exporting.

A veritable deluge of natural gas, electricity and renewable energy crosses the border each year at a steadily increasing rate.

Rather than reducing oil consumption by weaning East Coast residents off home heating oil, we’re exporting Newfoundland and Nova Scotian natural gas and hydro power south. 42% of Atlantic Canada uses oil to heat their homes. That seems like a good place to cut down on foreign imports.

For the Atlantic provinces, that’s nine million barrels of oil a year. While using oil as home heating fuel may be less prevalent in Ontario and Quebec, they still consume almost 17 million barrels. If we could get every one of those Canadians to heat their homes via natural gas or hydroelectricity instead, we could cut our oil imports by 10% and likely cut down on our carbon footprint. That could mean, say, not importing from Saudi Arabia anymore.

So this is an example of why Velshi’s campaign is so mystifying. The Western part of the country is essentially a self-sufficient petrostate. Their oil, electricity and natural gas are all assured and domestic. The Eastern part of the country, on the other hand, is a jamboree of poor economic planning that sells its own resources, then imports those resources from across the Atlantic.

And you know what the problem is? We’re terrified of saying three little words;

National. Energy. Plan.

Levant, not surprisingly, doesn’t agree. Repudiating a so-called “command economy,” he says that there’s no need for our government to rethink our market-driven trade relationship with the U.S. That’s no surprise coming from the Sun News host.

But in his own sort of quasi-Libertarian Hare Krishna, Levant hits on a really good idea.

He says that Eastern Canada dependence on imports “could change with public demand for ethical oil.”

This sort of language is often used by tarsands supporters. Why not join them? Why not have a discussion about what sort of oil we want to be consuming – we want Canadian oil that has a low carbon footprint, brings more revenue into Canada and helps all of Canada.

So let’s try something radical – ensure a truly Canadian oil and gas market that satisfies Canadian demand and makes sure our oil royalties are invested in the right areas. Let’s stop sending money abroad, by way of importing OPEC oil and from letting American oil companies take the tarsands for all its worth. Let’s ensure our own energy security and let that funnel into our green energy sector.

One part of that conversation should be NAFTA. It is a document that, along with independent provincial energy policies, has tied us inexorably with less-than-friendly regimes in the Middle East and Africa. It’s a document that allows for the wholesale marketing of our natural resources for a reduced benefit to ourselves.

That’s part three.


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