Target Saudi oil policies

Practices have demaged energy crown jewel

The actions of Saudi Arabia, including the expulsion of the Canadian ambassador and the sale of assets, following foreign minister Chrystia Freeland’s call for the release of jailed human rights champion Samar Badawi and others is a typical Saudi reaction after years of Western coddling over its abysmal human rights record.

No one should expect a self-declared absolute monarchy to treat its people nicely or to accept criticism, even from its own long-time backers. The Saudis have been spoiled for decades by the United States and the United Kingdom, which even rushed to defend the Saudis against a United Nations’ investigation into Saudi war crimes in Yemen.

While Canada is absolutely right in expressing its displeasure with Saudi human rights abuses, it could have also raised another long-standing Saudi policy that is closer to home and has badly damaged the Canadian economy. This is the insidious Saudi oil policy that artificially drove oil prices so low, it badly damaged Canada’s crown jewel energy sector.

In fact, it is surprising that Saudi-Canadian rift did not occur years ago when the Saudi monarchy manipulated oil prices to the determinant of Canada’s economy.

Saudi answered former U.S. President Barack Obama’s call to ramp up oil production and bring prices down to break Iranian and Russian economies.

The double whammy of low oil prices and increased production of American shale oil, which is produced at a lower cost per barrel, hit Canadian oil companies and workers hard. The oil sands accounted for 62 per cent of Canada’s oil production in 2016 or 2.4 million barrels per day, according to the Canadian Ministry of Natural Resources.

The most recent Saudi increase of oil production came in response to U.S. President Donald Trump’s request. Trump tweeted on June 30 that Saudi King Salman has agreed to his request.

The renewed increase in oil production could not have come at a worst time with the Trump administration imposing tariffs on Canadian goods.

The further lowering of oil prices may be the greatest danger to the economy as it will lead to the decline of the high-production-cost oil sands that cannot compete with low-productioncost Saudi oil.

Thus, the issue of oil prices should be the main issue that Canada addresses with the Saudi monarch, who has been using oil as political stick against its neighbours and mostly at the pleasure of the United States.

While commendable, the statements condemning Saudi human rights abuses will not convince Saudi Arabia to allow its citizens basic freedoms. The Trudeau government must ensure that its complaints on human rights abuses don’t also extend the damage to the oilsands, as the monarchy continues its pattern of manipulating oil prices for political ends.