Why is Canada still importing Saudi Arabia’s ‘dirty oil?’
The brutal murder and dismemberment of Saudi journalist Jamal Khashoggi, a murder that was apparently ordered by Saudi Arabia’s crown prince, means Canada has some decisions to make.
The most obvious one involves a multibillion contract to supply light armoured vehicles to Saudi Arabia, which is waging a merciless war against men, women and children in Yemen.
Should Canada renege on that contract given that the Saudi royals have shown themselves to be a rogue regime that is willing to murder whomever they want whenever they want without fear of consequences?
Canada also has another business arrangement with Saudi Arabia that perhaps we should also consider cancelling.
According to the National Energy Board (NEB), Canada imports approximately 80,000 barrels of oil a day from the kingdom, about 12 per cent of our total oil imports.
That amounts to about $2 billion a year that we pay Saudi Arabia for oil that is refined in New Brunswick and consumed mostly in Eastern Canada as gasoline, diesel, or airplane fuel. The Irving refinery in St. John, N.B., counts on Saudi Arabia for 40 per cent of its crude oil.
Maybe we should be calling that oil “dirty oil.”
Given that Canada is the fourth largest oil producer in the world and has more than enough oil to supply the whole country, it has long irked western oil producers that while opposition to pipelines and tanker traffic on the West Coast has met with vociferous opposition, oil tankers from Saudi Arabia, Algeria, Nigeria and Norway regularly unload on the East Coast and yet there is not the same outcry.
Sure, the oil imported on the East Cast is a lighter, sweeter crude than the tarry diluted bitumen that would be export- ed from the West Coast.
But given that we might want to think about cutting off Saudi Arabia, which supplies the second highest volume of oil imports after the U.S., because of its mafia-like behaviour, perhaps we should reconsider that Energy East pipeline project TransCanada mothballed a few months back.
It looks pretty good right now given that both the Trans Mountain and the Keystone XL pipelines are stalled indefinitely.
If Energy East were to be revived, would opposition in Ontario and Quebec be quite so strong if people knew they were making a choice between Canadian oil and Saudi Arabian oil? And what if the tarry diluted bitumen could be upgraded in Alberta so it was less of an environmental threat?
That was a possibility touted by Alberta Premier Rachel Notley last week. Her government pledged to invest $2 billion in partial bitumen upgrading facilities. Six private sector proposals are being looked at and if they come to fruition, the oil moving through the pipelines would be thin enough not to require diluents, which takes up pipeline capacity.
With increased pipeline capacity, the current of glut of Alberta oil would be reduced, which could mean higher prices for Alberta bitumen.
Of course, all these proposals would take a few years to become reality. But the fact remains: Demand for oil is not going to totally dry up any time soon. Demand will decrease eventually, but oil will still be needed for some years to come so we can have gasoline, diesel, jet fuel and petrochemical feedstock to make all the plastics we use.
Right now, most of the oil Canada produces sells into the United States for about $15 a barrel. At the same time, we are importing oil from places like Saudi Arabia for a much higher price. How does that make any sense?
It’s also clear that given the upsurge in shale oil production in the U.S., our trusty customer doesn’t need our oil as much as it used to. That combined with U.S. President Donald Trump’s volatility when it comes to trade could put our oil exports in danger.
There’s a lot of uncertainty in the world these days. What better time for Canada to make sure we don’t have to depend on anyone else but ourselves when it comes to energy?
Gillian Steward is a Calgary-based writer and freelance columnist for the Star. Follow her on Twitter: @GillianSteward