Energy fuels Canada’s economy and enervates its politics.
As with Saudi princes, dumb luck has made it less urgent for
Canadians to confront their country’s shortcomings and reconcile Canada with big
changes in the neighborhood. As commodity prices peak, Canadian politicians continue
re-circulating ideas that soured when prices soured before.
Martha Hall Findlay has been branded by the Editorial Board
of the Globe and Mail as a “policy-oriented” candidate for the leadership of the Liberal Party of Canada. She also
lives in Toronto.
So, it’s not surprising that she secured free space in that
paper to write about Canada’s energy industry and its pipeline
infrastructure. There’s no other intellectual center in Canada
further removed from the action yet more determined to sound more thoughtful
about energy.
In her column, Hall Findlay joined an alliance of pinstriped
bankers, pipeline engineers, cash-strapped politicians, and Canadian nationalists
who believe that it would be inspiring, profitable, and incredibly sophisticated
to lay more steel pipelines across Canada. The country, she claims, needs a
“national strategy for energy infrastructure.” She sees the need, but never
identifies who would pay—only that the federal government should have a “key
facilitating and brokering role.”
Underpinning her seemingly inexpensive platitudes, however,
are a couple of hot new truths that are more dangerous than true.
“Canada has an abundance of
energy – and the world wants it. Yet, Canada is a captive supplier to the U.S.,
which results in a significant discount in the price we receive. And with the
International Energy Agency’s prediction that America will become the world’s
largest oil producer by 2020, our reliance on the U.S. market is even more
worrisome.”
The numbers "2020" and the letters "USA" all by themselves
seem to inspire dark visions in rather ordinary Canadians.
But Canada isn’t a “captive supplier” to the US. Today’s
price discount is caused by a temporary bottleneck in US regional
infrastructure, not because the US per se is a lousy customer. In addition,
Canada isn’t just a supplier. It also buys oil from the US and overseas. Western
Canadian oil moves north and south, and out of Canadian ports as well.
One forecast by
the IEA and the delay by President
Obama of one pipeline project will
not close the US market for future Canadian exports and do not automatically make
new east-west, all-Canadian oil pipelines necessary or commercially wise.
Furthermore, even if the US were to become a net seller
rather than a net buyer of oil, there would be no strategic or commercial reason
why American ports and refineries wouldn’t be able and willing to export
Western Canadian oil to China and elsewhere, while continuing to transport
American oil to Eastern Canadian refineries.
If economics were to decisively favor giving up on the US market,
the private capital markets and Canadian regulators will facilitate the
construction of appropriate alternative east-west infrastructure.
Conventional energy projects only need premiers’ conferences, prime ministers, think-tank
endorsements, and "new strategies" by federal governments when the merits of the
projects are moot.
Fortunately, Martha Hall Findlay and, more importantly, Stephen
Harper don’t need to concoct a new strategy.
North Americans have a perfectly good one now. Continental
free trade, continental investment protections, and a shared Canadian-US policy
of allowing global competition to drive energy markets have made both countries
spectacular energy leaders—and their consumers the envy of the world.
There’s no guarantee oil prices will always favor Canadian sellers.
There’s no chance high prices won’t lead to new competitors and tougher competition
for Alberta and Oklahoma oil producers. And there’s no way environmental
concerns will fade away.
Shifting commodity-market realities, however, don’t demand that
Canada rewrite its policies and give up on a continental vision that enriches
both countries right now.
