Canadian oil’s exaggerated death
This week, two federal opposition leaders used the pandemic as an excuse to urge the government to shut down Canada’s once-vibrant oil and gas industry.
“Oil is dead,” proclaimed Green leader Elizabeth May at a news conference on Wednesday. “The pandemic, in a very real way, as horrific as this is at many, many levels, gives us an opportunity to stop and think about how we get this economy back on its feet.” In her view, this means replacing oil with green energy and finding other jobs for those working in Alberta’s oilpatch. Bloc Québécois leader YvesFrançois Blanchet agreed, saying that the “tarsands are condemned and putting more money into that business is a very bad idea.”
But not supporting the oil industry at a time when most of the economy is on life support would simply amount to kicking Alberta when it’s down — and throwing in a gut punch for good measure. And it would leave Canada as a whole worse off.
May used the analogy of how streaming services disrupted the video rental market. “Just as much as Blockbuster Video thought it had a solid business proposition until Netflix came along, that’s the kind of disruption we’re seeing in the energy sector,” she said. “And betting on Blockbuster Video right now would not be a good way to spend our money.”
But oil is not Blockbuster ( for starters, imagine if every new Blockbuster outlet had needed to go through a years-long approval process, with constantly shifting rules, before ever being allowed to open). The comparison is also absurd because Canada was never propped up by video rentals — statistics show that in 2018, oil was Canada’s most valuable export and, the year before, the industry supported 530,000 jobs and paid $8 billion into government coffers. And green energy is not Netflix: that industry has required billions of dollars in public subsidies over the years just to be remotely competitive with fossil fuels.
Putting public money into a dying industry to keep it afloat is rarely a good idea. And it is certainly true that we have seen a sharp decline in the demand for oil worldwide, as COVID-19 has confined people to their houses, while cars and airlines sit idle. But try telling most Canadians that the natural gas they’ve been using during this crisis to heat their homes and bake their bread is a relic of the past. They know better.
Indeed, it’s hard to imagine how we would have coped with this pandemic without fossil fuels.
They are what powers the ships, trains and trucks that have kept our food supply chain up and running. They are used to make the packaging that protects our food from being contaminated with bacteria and viruses ( even the once- reviled plastic bag has come back into fashion, as it is more hygienic to throw potentially contaminated grocery bags away). And they are essential for keeping the factories that produce the goods we need and the delivery trucks that are bringing them to our doors functioning.
In 2018, Canadians pulled 4.6 million barrels per day out of the ground and exported 3.7 million. Yet we also imported 800,000 barrels per day, mostly to Central and Atlantic Canada. While the majority of this oil comes from the United States, a lot of it is sold to us by less savoury countries, like Saudi Arabia, which suppresses women’s rights, funds terrorism, has waged a deadly and pointless war in Yemen in recent years and, along with May and Blanchet, has been actively seeking to destroy our oil and gas sector.
This would not be necessary if Canadian governments had not blocked the proposed Energy East pipeline, which would have taken oil from Alberta to refineries on the East Coast. As an alternative during this emergency, Irving Oil, which runs a refinery in Saint John, N.B., was granted approval earlier this week for its “urgent” request to ship oil from Vancouver to Atlantic Canada through the Panama Canal.
The situation illustrates just how backwards we’ve treated our energy sector. A good chunk of the public money that is currently going to support the industry — the public money that the Greens and the Bloc are now railing against — comes in the form of the federally owned Trans Mountain Pipeline expansion, the cost of which has ballooned to $12.6 billion, from the initial estimate of $ 7.4 billion. The pipeline would have been built using private money if Canadian governments had simply gotten out of the way and allowed Kinder Morgan to build it back when it was first approved by the National Energy Board in 2013.
Contrary to what May and Blanchet might hope, demand for oil will increase once this pandemic subsides and people begin travelling, commuting and consuming once again. And if this crisis has taught us anything, it’s that Canada needs to be more self-sufficient, not less. That is achievable without a massive influx of public money, but it would mean not treating our country’s most important industry like a pariah — and that must start with our elected officials in Ottawa.