Make up your mind, IEA. Is more oil good or bad?

Mark Milke, Financial Post, June 18, 2021

What a difference a month makes. In May, the International Energy Agency (IEA) told the world that if the goal of “net zero” greenhouse gas emissions were to be met by 2050, governments needed to abide by 400 IEA “milestones,” including net zero emissions in the electricity sector by 2040, no new sales of vehicles with internal combustion engines by 2035, and building the equivalent of “the world’s current largest solar park roughly every day.”

The 400 utopian recommendations made clear the IEA’s view about the role of oil going forward: as little as possible, as soon as possible. As the IEA put it, these recommendations “include, from today, no investment in new fossil fuel supply projects.”

Fast forward less than four weeks. Now the IEA is begging OPEC and allied members, such as Russia, to increase their oil production as soon as possible. Suddenly worried about a rebounding world economy, and oil’s skyrocketing demand with it, the IEA last week said “OPEC+ [its allies] needs to open the taps to keep the world oil markets adequately supplied.” And it advised any consumers who might be worried about possible shortages to relax, arguing that OPEC and Russia could boost oil production by two million barrels a day (mb/d), while “If sanctions on Iran are lifted, an additional 1.4 mb/d could be brought to market in relatively short order.”

You may want to read all that again. Just last month, the IEA wanted governments to do everything they could to kill oil. Now, it’s begging OPEC and Russia to open the oil spigots more. It even hopes Iran can join in. This would be the same Iran that funds Hezbollah and Hamas to attack Canada’s only liberal democratic ally in the Middle East, Israel.

True, the IEA is not calling on OPEC nations and allied members to invest more to increase long-term oil production. It just wants them to help the world avoid an immediate oil shortage. For Canadians, and even Americans, however, this is a distinction without a difference. It’s also a little maddening, given the events of the last seven years.

In both 2014 and 2020, Saudi Arabia flooded the world market with oil, artificially depressing prices in an effort to harm both the U.S. shale oil sector and Canada’s oil industry. The effort succeeded, throwing Alberta, Saskatchewan and Newfoundland & Labrador — and their energy workers— into a slump from which none has fully recovered.

Here’s another bit of useful context: The very countries that the IEA is now begging to increase oil production are among the world’s worst violators of civil rights. Washington-based Freedom House comprehensively categorizes nations as Free, Partly Free, or Not Free. Of the 13-member nations of OPEC, it ranks just two as Partly Free (Kuwait and Nigeria). The other 11 it tags as Not Free: Algeria, Angola, Republic of Congo, Equatorial Guinea, Gabon, Iran, Iraq, Libya, Saudi Arabia, and Venezuela. For the record, Freedom House also ranks Russia, the other big oil supplier to whom the IEA now appeals, as Not Free.

There are many examples of the brutality of some of these regimes. A U.S. intelligence report on the 2018 murder of journalist Jamal Khashoggi in the Saudi embassy in Istanbul concluded it was ordered by Crown Prince Muhammad bin Salman. Or consider last year’s poisoning of Russian Opposition leader Alexei Navalny. German Chancellor Angela Merkel, among others, blamed that attempted murder directly on Vladimir Putin’s Kremlin.

The IEA’s hypocrisy could not be more blatant: telling nations in May to stop their investment in oil and natural gas “today,” only to plead with the world’s most regressive regimes in June to open up their oil taps. But the hypocrisy matters less than the practical effect if the two IEA declarations are taken seriously by liberal democratic countries with substantial oil reserves.

At present, Not Free countries such as Saudi Arabia, Russia et al., account for about half the world’s oil and natural gas production. Canada and the United States and other free countries produce another roughly one third, with Partly Free countries responsible for the remainder.

The IEA’s call can only help the rogue regimes while hurting liberal democracies, a process that is already underway. Just last week, TC Energy put the final nail in the coffin of the Keystone XL pipeline after the Biden administration pulled the project’s permits in January. This week, it appears our own federal government is musing internally about whether Canada will need any new oil pipelines ever again.

Meanwhile, anyone who thinks the Saudis and the Russians will heed the IEA’s May message of no more investment is naïve in the extreme. To cite just one example: Russia’s partly state-owned Rosneft is busy developing its US$170 billion Vostok oil project in the Arctic.

Neither IEA position – neither “kill oil and gas investment today” or “Dear OPEC, please increase production” — is in the interest of Canada, the United States, or any of our liberal democratic allies. Democratic leaders worldwide should point that out to the IEA.

Mark Milke is executive director of research with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes, and co-author of The 2021 Tyranny Index for Oil and Gas. Image credit: