Canada’s debilitating inability to gain fair market value for its largest export commodity – crude oil – has become the top economic story of 2018. It will likely dominate headlines in 2019.
It’s so bad that heavyweight energy investors with large bets on Canada are now seeing fit to write courtly letters to Prime Minister Justin Trudeau explaining the nature of their business, since there seems to be no other way for him to know it. They’re probably wondering why they’re wasting time, with so many of their brethren having already hightailed it out of Canada.
Just a few years ago, oil executives encountered in Calgary seemed like a taut and eager breed of problem solvers — sharp-eyed and ready to spring on the next challenge. No longer.
Why is the patient so ill when the No. 1 determinant, world oil prices are reasonably sound? Money is still fairly cheap. Success is not hampered by a shortage of labour or knowhow. New oilsands projects are coming online and the result is a record amount of our heavy oil being produced and ready for export. All of this should add up to success, but that’s not what’s happening.
The simple fact that Canadian oil is being heavily discounted seems an insufficient explanation for the current funk. So does the banal observation that a lack of pipelines is the problem. There is more to it.
The present we are living in suddenly bears an uncanny resemblance to the future envisaged a decade ago in an environmentalist strategy document now infamous in the Canadian energy business: The Rockefeller Strategy, so named because of the foundation on whose letterhead it was circulated.
The basic strategy was to raise the negatives of the oilsands, raise costs, slow down and stop infrastructure, and enrol key decision-makers in opposition to Canada’s oil industry. Ten years later, all of those things have come to pass.
The Rockefeller group, based in the United States, laid down five specific tracks to solve what they saw as the Canadian problem. First, they would stop the expansion of pipelines and other infrastructure. Second, they would forcibly cause reforms to the governance of “water, toxics and land.” Third, they would “significantly reduce future demand” for oilsands product. Next, they would leverage the debate to policy victories in both the U.S. and Canada. Finally, they would persuade policymakers that oil wasn’t going to be needed in the future because we’d have electric cars.
To execute this strategy, Rockefeller commenced a decade-long campaign to taint the world’s image of Canada and turn Canadians against each other. It was a brilliant success.
Rockefeller’s funders must be pleased with Trans Mountain’s expansion in limbo, the two next best pipeline prospects barely registering a pulse, and Alberta lowering its oil production on Jan. 1.
Next, the Trudeau government is preparing to pass legislation to permanently bar oil exports from leaving ports on the northwest coast of British Columbia and break up our distinguished National Energy Board after it was persistently criticized by Rockefeller’s partners in its anti-oilsands campaign.
Our oil is called “ethical” for good reason. Yet, few of Canada’s high environmental and social standards that apply to domestic production are imposed on the inward flow of imported oil. It’s another of those dissonant facts we have become accustomed to. Discriminate against ourselves? Well, if we must. Against others, like Saudi oil — we wouldn’t dare.
Thankfully, the environmentalists’ goal of reducing future demand for western crude oil has been less of a success. Based on current projections from the Canadian Association of Petroleum Producers, crude oil production will jump 1.4 million barrels per day by 2035 to 5.6 million.
One thing the Rockefeller group didn’t predict was the ingenuity of Canadian oil marketers as oil by rail, truck, and optimized existing pipelines has ensured that even if it’s going cheaply to market, that oil is still getting to customers. Still, without changes, the Rockefeller strategy may yet prevail.
As 2018 closes, there is a rising bitterness in the West. A highly beneficial, ever-improving industry tooled for greener stewardship was targeted for a takedown that worked. No particular environmental benefits have resulted. The only clear winner here is the U.S. economy. Landlocked Canadian oil means cheap feedstock for American refineries. We are, unwittingly, helping to Make America Great Again where annual economic growth is almost four per cent versus a paltry two per cent in Canada.
The Trump energy and economic expansion, love it or hate it, means that every environmental measure in Canada is of trivial global impact.
Congratulations, Canada, you’ve been thoroughly had by a U.S. eco-campaign that hurt our economy but hasn’t slowed U.S. oil interests one iota.
Stewart Muir is a contributing writer for Canadians for Affordable Energy and executive director of Resource Works.
Build your own refineries, then.
You’re actually talking sense. When I posted this I wondered what kind of diatribes it would bring but you are 100% correct. We also need to start making our own steel etc instead of importing from China to make into parts/product here. Our ‘manufacturing’ base is more of an ‘assembling’ base. We send our raw resources elsewhere, buy back the materials created from them either in ready to assemble form or complete and ready for market. For example – Hodgdon and IMR powders are (or at least were – I assume nothing has changed recently) made in Quebec – shipped to the US, bottled and sold back to us. It’s crazy.
The problem we have right now is a federal govt that is Marxist and in the pockets of ‘other’ interests. Think the Obama admin but more cartoonish, self-destructive and openly treasonous. We need refineries, pipelines and MORE. But we can’t get them built. Unfortunately, Canada is so close to imploding right now I’m not even sure if we’ll make it to the 2019 federal election intact so that we can begin to address the problems.
Some days living in this country drives me nuts. The nation itself simply doesn’t make any economic sense anymore. The biggest barrier to our success appears to be our own government and to a large degree, the 49th parallel.
We’re right there behind you. Canadian Gavin McInnes (de-platformed everywhere) was quoted in that recent John Stossel article (posted here) that “Mexico sucks because of Mexicans.” It’s a truism. To the degree that America sucks, it’s because of Americans (especially including those who want more illegals). If Canada sucks, it’s because of Canadians … and how they vote. For the most part, countries become what they choose to become.
Canadians are idiots…They let Pierre Trudeau wreck the country decade ago, and now they are back for round 2 of demolition derby…Of course, Americans aren’t much better, with our elites signing on to the suicidal “climate change” nonsense.
“Hard to believe the Rockefellers would do anything to undermine the competition in the oil business,” he said with a smirk to convey sarcasm.
What is “fair market value” for oil? A lot less than it is. That is for damn sure. The entire oil world is a cartel.
Another factor to consider is the ‘type’ of crude oil that Canada’s tar sands yield.
Most people don’t realize that there are many different types or grades of crude. These different types of crude sell at different prices and each refinery typically can only refine a specific type of crude or within a range of crudes.
Although the industry breaks them down into four types:
Brent Blend – A light (sweet) crude oil.
West Texas Intermediate – Another light or sweet crude oil with an even lower Sulphur content than Brent Blend. The base crude oil price is shown as this crude.
Russian Export Blend – A medium weight sour (high Sulphur content) oil.
Dubai Crude – Light weight, but very sour.
There are of course many sub-categories within each.
Canada’s tar sands crude oil is a mixture of crude, sand, clay, and water that ends up as damned near tar, hence the name ‘tar sands. It takes a special type of refinery to refine the stuff. It sells at a low price because the cost to refine it is high.
Venezuela has the same problem. They have to have a pre-refining process even before it gets to the cracker (the part that separates the crude into gasoline, kerosene, diesel fuel, etc.). Venezuela’s output is hurt mostly by the breakdown of their pre-refining equipment. No one wants to buy it with all that crap still in it.
I worked on a project for the Shell refinery in Scotford, Canada a couple of years ago that was a 35% expansion of their existing refinery specifically designed to handle Canada’s tar sands crude.
So it’s also a case of limited refineries around the world that can handle the stuff.
Best to refine it in Canada…
I am glad David Rockerfeller is dead .His last remaining brother is not far behind. They have sabotaged our nation and others far too long but these people in politics have been brought and paid for just as long. I mean how much wealth does one family need ?
Need has zero to do with anything. A person/family should be able to make and keep as much as they want, so long as they do so legally.
“Legally” – well that’s the hitch these days. Lots of stuff is ‘legal’ if you can afford a team of lawyers or buy off a few politicians. Doesn’t necessarily make it right. But in a perfect world – you are absolutely right.
Bullshit. Doesn’t work in a corrupt Society. Laws have to be based on morality to work. Without morality as the foundation, you can make anything legal. And scum like that have done exactly that
You know any Rockefellers? I do. Nice people, based on how they treated me. Scum? Cannot prove it by me. I liked them.
Glad to see that star hasn’t gone completely off the rails.
A bit myopic to blame a Rockefeller strategy for Canada’s woes in its energy sector. Geography and geology limit Canada’s crude more than anything. They want to build the Keystone XL to get the crude to market via the Gulf of Mexico – one problem – it has to go through the USA. Sure, you could build a pipeline to Vancouver, which they should, but it has to go over some pretty rugged mountains – never mind the greenies in BC not really being all that open to the wants of those Albertan cowboys. Going east you have the Canadian shield of swampland and lakes between Toronto and Winnipeg making a pipeline daunting and very very long…and still the super tankers aren’t coming into the great lakes. Simple fact of geography is it’s easier for the Canadian prairie provinces to trade with the states to their south than to trade with BC or Ontario. Alberta crude would be in high demand in the states if not for all the new production brought on by shale oil, which is all light and sweet. So right now it’s a perfect storm of land locked resources without a market to sell to, which is depressing the value. Canada’s over-dependence on the USA put them in this predicament. If they had forward thinking politicians (conservative party included) this wouldn’t be a topic of discussion today as the infrastructure would’ve been built generations ago. Yet they still can’t even manage to build a world class divided 4 lane highway between Vancouver and Halifax. It could be done, but why when you can just drop down to the states and use their roads??
Funny money fools who lose million and billions had it coming:
https://www.youtube.com/watch?v=0wlNey9t7hQ
To the decent leafs up north I apologize for the assholes we have endured/put up with in the U.S.,we are slowly working on solutions.I would say till then,as we try and get our house in order you do the same and set up your own refineries/shipping ect
i’ve no answers for you foxy–
even if you built a refinery,you still have to ship it so you’re back to where you are currently–someone doesn’t want that oil taken out of there–
maybe if w.canada seceded & joined us,tptb would relent?
energy related but different countries–
story 1-despite all the hoopla about us exporting natural gas,we’re importing the hell out of russian natural gas–
story 2-within the next few days,israel,cyprus,and greece are expected to sign an agreement for a natural gas pipeline–
Tampa,
I was late but posted something for you in the post below.
10 Mandatory Preps Regardless of How SHTF
thanks–
It’s a big complicated problem. There is a lot of talk in the west about secession right now. That would solve part of the issue. The other part of the problem is the border between us. The largest market in the world for everything we do here is right on our doorstep and an imaginary line in the sand prevents us from accessing it to its (and our) fullest potential.
That line is not imaginary. We have Trump. You have Trudeau
FWIW I’m glad Trump is where he is. He has emboldened others. Change is coming here as a result – I hope peacefully. Gonna be painful in the meantime, though. Real painful.
I think that our little town is a sanctuary town, FM. Come on down!
Don’t tempt me.
I think Trump is betting on Democracy being contagious. It’s working in Europe right now. You won’t have Trudeau for long. It’ll work out
Nationalism is contagious..
This crap has been going on for decades. The green revolution of the 70s had large factories jumping through hoops until practically everything downsized the smokestacks and located actual steel production to less green states. The private trucking industries started folding in the eighties. It only took a green leaning politician 4 years to make a dent, and after 8 years of Evan Bayh, the industry was almost gone. Refineries were practically ran out of North America, right along with steel production. They systematically monopolized all the money and resources so small corporations and business will have serious hurdles to get into business. They scooped up all small competitors.