Alberta pipelines are bad but foreign oil is fine?

Mark Milke and Lennie Kaplan, Financial Post, Oct 5, 2021 

 In one of the great ironies of modern Canadian life, a country with among the world’s largest oil reserves, both offshore and on the prairies, has imported $488 billion in foreign oil since 1988.

Break down that $488 billion and some interesting patterns emerge. Most Canadians probably wouldn’t guess that the province with the most oil imports is also the one whose pundits and politicians are most reflexively opposed to oil extraction and pipelines — Quebec. Quebec has imported over $228 billion in foreign oil since 1988 — far more than any other province.

It’s not that most Quebecers necessarily prefer foreign to Canadian oil. A 2020 Ipsos poll from the Montreal Economic Institute showed that 50 per cent of Quebec respondents wanted the province to develop its own oil industry. When asked where they’d prefer to see their oil imported from, 71 per cent said Western Canada.

New Brunswick is the next largest importer with nearly $136 billion in foreign purchases between 1988 and 2020. In part, that can be explained by Saudi Arabian crude shipped into the port of Saint John and the Irving Oil refinery there.

As to where the foreign oil flowing into Canada came from, it depends on the decade examined. Across all the years for which we could track imports (1988-2020) the biggest suppliers of oil to Canada have been the United States (nearly $95 billion), Norway ($79 billion) and the United Kingdom (nearly $63 billion). Rounding out the top five are Algeria (over $58 billion) and Saudi Arabia (over $44 billion).

To focus more recently, if you reduce the analysis to just 2010-2020, the United States is still Canada’s top oil supplier at over $84 billion. In fact, most U.S. oil imports flowed into Canada in that decade, with only roughly $10 billion before 2010. That’s due to a mid-decade change in the U.S. policy that for decades banned most oil exports.

Next up at number two is Saudi Arabia, which sent over $26 billion worth of oil to Canada between 2010 and 2020. Algeria was third at over $20 billion, followed by Norway at over $17 billion and Nigeria at over $12 billion.

Averaged across the country, in 2016, the last year for which census consumption data are available, each Canadian household in effect imported $1,021 in foreign oil. Separate Quebec out, however, and the average Quebec household in effect imported $1,576 in foreign oil that same year.

To put 2010-2020 oil imports in perspective, as Canadians were importing over $26 billion in foreign oil from Saudi Arabia over that decade, they were also buying $4.2 billion worth of coffee from Brazil and Colombia and $17.0 billion in fruits, nuts and vegetables from Mexico. That’s $21.2 billion in total in coffee, fruits, nuts and vegetables from those countries, or roughly $5 billion less than what we spent on oil from Saudi Arabia.

A number of factors explain Canada’s the level and pattern of foreign crude oil imports. Eastern and central Canada’s proximity to U.S. oil producers is one factor; the type of oil a refinery processes and ongoing pipeline constraints are others.

Given such complexities and the need for open markets and flexibility of supply, it would be a mistake to advocate protectionist measures, which is not what we’re doing. We’re simply providing a reminder that artificial barriers to Canada’s crude oil trade —anti-oil and gas activism and regulations and laws designed to thwart resource development — can have unintended consequences, including higher foreign oil imports, sometimes from unsavoury places.

Mark Milke and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded in part by taxes paid by industry on carbon emissions. Their latest publication is Foreign oil imports to Canada: $488 billion between 1988 and 2020.