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Biden chose Venezuela over Canada for oil

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6 minute read

From the MacDonald Laurier Institute

By Brian Lee Crowley

Biden is welcoming oil from one of Latin America’s most odious regimes. It’s a big win for Nicolás Maduro, but a bad deal for America and Canada

The United States needs more heavy oil for a whole series of reasons. President Joe Biden could have chosen to have that oil come from a close friend and ally, environmentally-conscious Canada, or from one of the world’s nastiest regimes, Nicolas Maduro’s Venezuela, which doesn’t give a toss about the environment. Which did he choose?

Venezuela, of course.

In exchange for modest concessions on electoral reform, the Biden administration just lifted sanctions on Venezuela, allowing them to export hundreds of thousands of barrels a day of vital heavy oil to the United States. The shale oil revolution has not and cannot change the fact that the US produces virtually no heavy oil, yet many of this country’s refineries, especially on the Gulf Coast, were set up to refine that kind of oil. Most of their heavy oil is from Canada, which is why that country is far and away the largest exporter of oil to America— more than twice as much as Saudi Arabia, Mexico, Russia, and Colombia combined. If America is now a net exporter of oil, it can thank Canada.

The war in Ukraine caused unpopular price hikes at the gas pump. In response, the Biden administration has drawn down the Strategic Petroleum Reserve (SPR). That drawdown focused on medium and heavy crudes. OPEC responded with supply cuts aimed at throttling the supply of these strategically important crudes.

The drawdown of the SPR is reaching its limits but the risk of higher gas prices in an election year is rising. To OPEC and Ukraine, we must now add the heightened risk of conflict spreading in the Middle East.

In this context, recall that one of the very first acts President Biden took on reaching office was to cancel the permit for the Keystone XL (KXL) pipeline, a permit issued by his predecessor. Keystone XL was intended to provide 830,000 barrels a day of Canadian heavy crude to those Gulf Coast refineries. Pipe was already being laid.

Had President Biden allowed KXL to proceed, the supply of heavy oil to the US industry would have been secure, risky drawdowns of the SPR unnecessary and America would have been much less vulnerable to global supply disruptions and OPEC’s manipulations.

Instead, the President colluded with a campaign to vilify oil from Alberta’s oilsands as “dirty oil.” Yes, producing Canada’s heavy oil emits greenhouse gases. But then all heavy oil is GHG intensive, and Venezuela is the highest emitting in the world.

The Canadian oil & gas sector has invested heavily and successfully in emissions reductions. The industry has a $75 billion plan to decarbonize and achieve net zero by 2050, focused on carbon capture and storage and small modular nuclear reactors.

Venezuela has done nada in terms of real improvement in the environmental footprint of its heavy oil production. What it does have is a regime that is world-leading in terms of its human rights abuses and the damage it has inflicted on a once-prosperous economy. Every dollar America spends on Venezuelan oil will prop up one of the most violent and repressive regimes in the Americas, where Amnesty International says in 2022:

The security forces responded with excessive force and other repressive measures to protests…to demand economic and social rights, including the right to water. Impunity for ongoing extrajudicial executions by the security forces persisted. Intelligence services and other security forces, with the acquiescence of the judicial system, continued to arbitrarily detain, torture, and otherwise ill-treat those perceived to be opponents of the government of Nicolás Maduro.

A recent UN Fact Finding Mission to Venezuela talked about the “unremitting human rights crisis” and patterns of crimes against humanity in that country. Nearly 8 million Venezuelans are estimated to have fled the economic and humanitarian crisis there.

Meanwhile, Canada, while not perfect, has robust human rights protections and high environmental standards. It is also a magnet for immigrants (including tens of thousands of Venezuelans), having one of the highest shares of its population born elsewhere in any country in the world.

In 2021 President Biden was happy to offend one of America’s closest allies by blocking KXL because it was inconsistent “with my administration’s economic and climate imperatives.”  Three short years later, behind the fig leaf of Venezuelan electoral reform, he is welcoming much more environmentally damaging oil from one of Latin America’s most odious regimes, all to try and keep the price down at the pump. That’s a big win for Nicolás Maduro, but a bad deal for America and Canada.

Brian Lee Crowley is the Managing Director of the Center for North American Prosperity and Security (www.cnaps.org).

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Alberta

Indigenous-owned LNG projects in jeopardy with proposed emissions cap, leaders warn

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Indigenous leaders meet with Japan’s ambassador to Canada Kanji Yamanouchi. Photo courtesy Energy for a Secure Future

From the Canadian Energy Centre

By Cody Ciona

‘It’s like we’re finally at the table and we’re having to fight to keep our seat at the table’

A proposed cap on oil and gas emissions will threaten opportunities for Indigenous communities to bring cleaner alternatives to coal to international markets, Indigenous leaders warned during a recent webinar. 

Karen Ogen, CEO of the First Nations LNG Alliance, fears Indigenous-led projects like Cedar LNG and Ksi Lisims LNG are threatened by the cap, which is essentially a cap on production. 

“If we’re going to help China and India get off of coal and help reduce their greenhouse gas emissions, it makes common sense for us to be selling our LNG to Asia and to other countries. To put a cap on, it would just stop us from doing that,” Ogen said. 

“It’s like we’re finally at the table and we’re having to fight to keep our seat at the table.” 

Indigenous communities across Canada have increasingly become involved in oil and gas projects to secure economic prosperity and reduce on-reserve poverty. 

Since 2022, more than 75 First Nations and Metis communities have entered ownership agreements across western Canada. Among those are key projects like the Coastal GasLink pipeline and the joint investment of 23 communities to obtain a 12 per cent ownership stake in several oil sands pipelines. 

The planned federal emissions cap will stall progress toward economic reconciliation, Ogen said. 

“Our leaders did not accept this and fought hard to have rights and titles recognized,” she said. 

“These rights were won through persistence and determination. It’s been a long journey, but we are finally at the table with more control over our destiny.” 

Chris Sankey, CEO of Blackfish Enterprises and a former elected councillor for the Lax Kw’alaams Band in B.C., said the proposed emissions cap could stifle Indigenous communities pushing for poverty reduction. 

“We’re working hard to try to get our people out of poverty. All [the emissions cap is] doing is pushing them further into debt and further into poverty,” he said. 

“When oil and gas is doing well, our people do well.” 

Together, the Trans Mountain Pipeline Expansion, LNG Canada project and Coastal GasLink pipeline have spent more than $10 billion in contracts with Indigenous and local businesses

Indigenous employment in the oil and gas industry has also increased by more than 20 per cent since 2014. 

For Stephen Buffalo, CEO of the Indian Resource Council, an emissions cap feels like a step in the wrong direction after years of action to become true economic partners is finally making headway. 

“Being a participant in the natural resource sector and making true partnerships, has been beneficial for First Nations,” he said. 

“So, when you see a government trying to attack this industry in that regard, it is very disheartening.” 

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Economy

Canada’s flippant rejection of our generous natural resource inheritance

Published on

From the Macdonald Laurier Institute

By David Polansky

The fanaticism of environmental elitists has made people unwilling to discuss the serious human and economic costs of poorly considered environmental policies.

Strategic energy resources have long been associated with some of the world’s most odious regimes. Above the surfaces that cover rich mineral and fossil fuel deposits one finds religious fanatics, brutal tyrants, and corrupt kleptocracies. And yet with one resource rich nation in particular we find not Wahhabism or gangsterism but Mounties and maple syrup.

Canada is the world’s second-largest country and its lands and territorial waters hold some of the world’s most substantial oil and gas reserves. Looking at its energy policies, one might think it was Belgium. Canada’s resource wealth would seem to be a case of the good guys winning for once. Why then does Canada flee in shame from its geological (and geopolitical) situation?

The answer is that Canada’s elites have long ceased to think in terms of its national interests or fiscal priorities but have adopted a naïve environmental dogmatism. Since it ratified the Paris Agreement in 2015, Canada has embraced an ambitious, top-down, international agenda to achieve “net-zero” emissions and limit global climate change.

But the fact is that, despite its size, In absolute terms, its output has risen marginally over the past half century, even as its population has nearly doubled. And embracing this climate agenda is hardly a perfunctory matter: it will continue to result in declining incomes for the average Canadian as well as a weakened trade balance for Canada as a whole. Canada’s economy is being sacrificed on the altar of elite preferences divorced from the realities of how Canadians actually heat our homes or put food on our tables.

An honest assessment of Canada’s flippant rejection of its generous natural resource inheritance looks more like serial masochism than virtue.

In the wake of Russia’s invasion of Ukraine and the global sanctions it triggered, The irony is that with so much of Russia’s supply coming offline, Canada could have had a remarkable opportunity to fill the vacuum with its own production capacity.

Despite being the world’s sixth-largest producer of natural gas, Canada lacks even a single export terminal for LNG. When critics of Canadian LNG production pointed to the unfeasibility of meeting overseas demand, despite the entreaties of the Germans and other Europeans, they were only technically correct. Canada couldn’t easily meet overseas demand because our regulatory regime has held up the construction of as many as 18 proposed LNG projects over the past decade, largely due to climate concerns.

Ironically, Germany—the continent’s greatest industrial power—needed to reactivate discontinued coal plants to meet its energy demands (hardly an ideal outcome from an environmental standpoint).

Much of the shortfall caused by sanctions on Russia was also made up by LNG contributions from Norway—whose leaders have maintained that reducing LNG output would only cede the market to authoritarian regimes with weaker regulatory controls around their energy industries from both environmental and human rights standpoints. Thankfully, Norway’s government moved forward with LNG production and export despite past pressure from environmentalist in the European Union that attempted to curtail its fossil fuel extraction.

Canada could have followed Norway’s level-headed approach and in that could have helped replace Russian oil in the aftermath of the Ukraine invasion. The curtailing of Canada’s energy infrastructure is not imposed by a physical limitation in the world, nor was it commanded from the heavens; it was ordered by the Canadian Net-Zero Emissions Accountability Act of 2021, supplemented by ambitious plans promulgated by Ottawa to reshape the institutions and practices of the entire country in pursuit of this quixotic goal. Not just the oil-and-gas sector, but housing, construction, agriculture, etc. must bend before Net Zero.

One can already hear activist outrage that, “to oppose this agenda is to choose temporary profits over the preservation of human life and the planet that supports it.” This rhetoric has proven effective in advancing environmental policies but it is also a false dichotomy, as it treats the dilemma as one of “good vs. greed” rather than one of complex competing goods.

A society that has signed on to this sort of imposed austerity is one with less money for infrastructure, entrepreneurship, healthcare, and defense. A lack of investment in these sectors also brings serious and immediate human costs. And further, the real issue is not the value of environmental stewardship or of taking steps to moderate consumption—both of which are worthy goals in and of themselves—but of blindly adhering to preselected targets at all costs. These apparently unassailable commitments have deprived Canada of the kind of flexible management of strategic interests that prudent political leadership requires.

Indeed, the unrealism of these climate ideals has produced systemic dissembling across the country’s major institutions, given the pressure to comply regardless of the efficacy of their practices. In other words, the fanaticism of environmental elitists has made people unwilling to debate the issues at hand or to even discuss the serious human and economic costs of poorly considered environmental policies.

The Environmental, Social, and Governance (ESG) model has had the effect of placing certain questions effectively beyond the reach of politics. But questions of policy—as environmental and energy questions surely are—are by their nature political; they have inevitable tradeoffs that should be a matter of debate with an eye to our collective interests.

Instead, we have an intolerant environmental elitism that obstructs the open and honest public deliberation that is the hallmark of democratic politics. A more truthful and practical approach wouldn’t necessarily promote any one policy, but it would allow for public discussion that recognizes the genuine toll that environmental policy takes on Canada’s domestic well-being and our standing in the world.

David Polansky is a Toronto-based writer and political theorist. Read him at strangefrequencies.co or find him on X @polanskydj.

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