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Commentary: The Canadian Energy Centre’s position on free trade in energy

Our response to an iPolitics columnist

By Mark Milke
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An iPolitics columnist recently argued our 2020 Canadian Energy Centre report on foreign oil imports can be seen as a call that Canada “should eliminate all U.S. imports.” This is in error. It is opposite of what our research and commentary on the same have stated, including explicitly that “it would be a mistake to advocate protectionist measures.”

We sent the column below to iPolitics earlier this week with a request that it run on their website as a response and as a statement of our position. As of publication on the CEC website, we have not yet received a response. – Mark Milke, Executive Director-Research, Canadian Energy Centre   

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In a recent column from iPolitics’ Alan Freeman, the author asserts a number of things that seem to result from momentary pique rather than an understanding of the published research (and positions) of the Canadian Energy Centre. In so doing, he makes a claim that is the exact opposite of the published statements and position of myself and my colleagues—that of protectionism, which we at the Canadian Energy Centre have opposed, on the record.

In his April 15th column, Freeman surveys the landscape of foreign oil imports and the assumed position of everyone from another columnist (Diane Francis), to the Canadian Association of Petroleum Producers, to former federal Opposition leader Andrew Scheer. There is also a generic reference to “the Alberta government,” which apparently means the Canadian Energy Centre, given that he references our report released last fall on foreign oil imports to Canada.

I cannot speak for others Freeman references nor even for the Alberta government writ large. While the Canadian Energy Centre is an arms-length Alberta government corporation, neither Members of the Legislative Assembly nor staff of the Government of Alberta review or have input into our published research and columns.

The problem of foreign energy and its influence

With that clarification, on to Freeman’s column.

Freeman may wish to downplay the concept of ethical oil and the problem of rogue states, both of which he places in quotation marks, a common way to tell the reader one doubts the validity of the terms in the context in which they are used. However, responsible political leaders, such as German Chancellor Angele Merkel, and leaders in Ukraine and Poland do not. They and many others grasp that some countries use oil and natural gas as leverage.

Here are some examples.

In 2009, Russia cut natural gas supplies to Ukraine in mid-winter, ostensibly over a pricing dispute, but in reality to exert political pressure on Ukraine. That’s why the Ukrainian government later chose to source natural gas through different suppliers. As the Atlantic Council’s Daniel Fried has written, “since the Ukrainian people overthrew Putin-controlled President Viktor Yanukovych in 2014, Ukraine’s government has wisely developed alternative means of purchasing gas, including Russian gas, through pipelines from its western neighbors that bring Russian gas to Ukraine from the West (so-called “reverse flow”).

Fried notes this means “that Ukraine no longer purchases any Russian gas directly from Russia for domestic consumption, a major national security achievement that mitigates much of the Kremlin’s energy leverage over them.”

More recently, in February 2020, Saudi Arabia’s energy ministry directed the state-owned oil company, Saudi Aramco, to raise production significantly and thus flood the world market with cheap oil to depress prices and harm competitors. That directly harmed Canada’s oil and gas sector and, for the record, the U.S. sector, as well.

As for present dangers, German and Polish politicians both understand the danger of relying on Russia for natural gas imports. Last summer, after the poisoning of Russian Opposition leader Alexei Navalny (which German Chancellor Angela Merkel, among others, blamed on the Kremlin), the head of Germany’s parliamentary committee on foreign affairs, Norbert Röttgen, urged the cancellation of the Russian natural gas pipeline under construction to Germany, Nord Stream 2. He argued that “We need to respond with the only language that Putin understands, the language of natural gas.”

Meanwhile, Poland’s foreign minister Konrad Szymanski also cited the poisoning as a reason why Nord Stream 2 must be abandoned. He was worried that the new natural gas pipeline “will make the European Union economically dependent on Russia and undermine our ability to take decisive steps against this type of malign behavior.” 

Free trade in energy: Our past and present position

As for the protectionist charge from Freeman—he writes that we (and others) argue that “Canada should eliminate all U.S. imports”— my colleagues and I have in fact taken the opposite position, i.e., in favour of free trade.

  • In the Canadian Energy Centre study from September 2020 on foreign oil imports that Freeman cites, we did not endorse protectionism or even comment on it. As we state in the study, the point was to display data on foreign oil imports, not to offer “‘pro’ or ‘con’ policy prescriptions.”
  • We instead made our position clear in the accompanying September 15, 2020 column: “There are a number of factors that explain Canada’s level of foreign crude oil imports, including the type of oil a refinery processes and ongoing pipeline constraints. Given such complexities and the need for open markets and flexibility of supply, it would be a mistake to advocate protectionist measures.”

Freeman is blasé about foreign oil imports because, as one example, they “tanked” in 2020—a year obviously not complete when we released our September 2020 report. Additionally, it’s odd to make a claim about one year being a trend, especially a pandemic year, but this is what Freeman does.

One key reason we often note foreign oil imports—be it over multiple decades, the past decade, or 2019 where we chronicled lower import volumes—is because there are “do no harm” options for Canadian governments. They include the opposite of protectionism: allowing oil and gas entrepreneurs to get such products to markets, be it advocating for Keystone XL to proceed, or ceasing opposition to other pipelines that would open up Asian markets.

That would require ceasing reflexive antagonism to pipelines, i.e., British Columbia’s government and its opposition to the TMX pipeline; the federal government’s ban on (large) tankers on British Columbia’s north coast; and Quebec, where premier Francois Legault once called Western Canadian oil “dirty”. They and others can choose a pro-free trade, do-no-harm policy vis-à-vis one of Canada’s most critical and largest sectors.

A pro-continental energy market position

Canadian Energy Centre research reports have consistently pointed to the continental energy market and its benefits for both the United States and Canada. We have regularly noted that Canada is missing export opportunities, and that U.S. policymakers and others should recognize the ally that is Canada, and be aware of our energy exports. Some examples of the foregoing are:

If my colleagues or I were advocating protectionist policy prescriptions, we would hardly take the time to produce reams of research that demonstrates the benefit of Canadian oil and natural gas not only to Canada but the United States and the world. Nor would we clearly state “it would be a mistake to advocate protectionist measures.”

I realize that reporters cannot track every study or column written by myself or my colleagues. However, I have no record of Alan Freeman contacting me or my colleagues for our actual position.

The late Daniel Patrick Moynihan, a onetime U.S. Senator from New York, famously said that “Everyone is entitled to his own opinion, but not to his own facts.” Freeman is entitled to his opinion. He is not entitled to make up positions that I and my colleagues at the Canadian Energy Centre do not hold.

Mark Milke is Executive Director of Research at the Canadian Energy Centre.

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