Canada’s Oil Wealth: What We Can Learn From Norway

Canada lacks an explicit national energy strategy, and in so doing, implicitly hands the keys over to non-government entities and the interests of foreign investors – including other governments¹. BC economist Robyn Allan points out that state-owned oil companies control more than 80% of the world’s oil reserves. In lacking a nationalized oil company to run the tar sands, Canada is left with the largest oil resource open for private investment. Naturally, Canada’s tar sands are a hotbed for foreign investment – and it is by way of the private sector that the Albertan government decides which projects go through and which pipelines will be battled or built next². As an aside, this presents an interesting contrast to Joe Oliver’s remarks in January this year in which he cast those who oppose furthering tar sands development as eating from the hands of foreign interest groups³. In the title of his letter Oliver claims the deregulation of oil sands development is in advancement of “Canada’s national economic interest”⁴. It is difficult to see the fast-tracked development of a resource in the hands of a single province which divvies access between foreign governments (e.g., China, Korea, Norway) and private companies, the proceeds from which don’t exactly find their way into every Canadian pocket, as any kind of ‘national’ interest⁵.

Allan believes Canada is being outplayed in the global market, causing us to lose control of our resource as well as the ability to ensure profits remain in the country. She argues for the implementation of the Norwegian model of a firm federal stance on Canada’s oil destiny in order to secure long-term national benefit and avoid losing our grip on environmental standards (it is yet a hard energy argument, but the soft path is unthinkable in terms of the needs of the tar sands). We should, for instance, be capable of achieving energy security and maximizing tax revenues, job growth, and environmental protection – albeit possible gains in this latter area are marginal due to the already environmentally devastating effects of the tar sands. As well, corporations quite logically do not hold these issues at heart when considering how best to expand profits.

With these concerns in mind, journalist Mitchell Anderson presents four measures under which our current practice is ghastly unsustainable⁶. Firstly, Canada remains dependant on imports from the Middle East for 50% of its energy supply. This will be exacerbated if Canada begins to ship raw bitumen to China, requiring condensate from the Middle East to dilute it for pumping. Second, despite vast oil wealth, Alberta will remain $3 billion in debt in 2012⁷. Third, we continue to harvest the oil sands full force all while the Alberta Federation of Labour, the price of production and the relativity of resource value to global currencies all indicate that a slower approach is superior. Finally, the tar sands attract such a lack of credibility that Alberta spends $25 million per year trying to debase environmentally-minded criticism⁸.

Allan prescribes shipping value-added product as opposed to raw bitumen, selling according to the Canadian dollar, and selling upgraded crude to Eastern Canada first to make prices attractive on both sides⁹. Upgrading crude makes the product salable in Canada, which Allan argues would benefit Easterners with lower purchase prices and Albertans with higher sale prices. It would also cut pipeline capacity requirements in half because new lines for condensate would not be needed¹⁰. To reach this end, states Allan, the most important things we can do are oppose the Northern Gateway pipeline that would see bitumen shipped to China and get behind the TransCanada Pipelines plan of converting a natural gas line to funnel Western crude into the East. I would add to this the elimination of polemics from the national dialogue on our energy future.