Squeeze the industry to please his party’s green base or keep output, revenue and high-paying employment flowing?
Talk at the latest climate-change shindig in Dubai has centred around the future of the oil industry and whether countries should pledge to phase out oil and gas production entirely or simply transform the industry in decades to come. Canada always talks a deep-green game at these affairs but are we really ready to nail shut the oil and gas coffin?
Maybe not. In Dubai Canada announced a cap-and-trade approach to oil and gas emissions but argued it won’t actually stop oil and gas production outright. The provinces, who yet again weren’t consulted, may not agree. Besides, promises are one thing. The record is another.
It also emerged in Dubai that the Emirates, seventh largest oil producer, is expecting to increase its production by a million barrels a day (mbd) by 2030. This is not a new trend. According to the U.S. Energy Information Service, the UAE increased production of oil and hydrocarbon liquids like coal oil by 15.3 per cent between 2015 and 2022, from 3.7 mbd to 4.2, fourth-most of all oil-producing economies. That’s much faster than world output, which was up only 3.6 per cent since 2015, reaching 100.1 mbd last year.
The irony — maybe even the hypocrisy — is that three countries in the Americas have increased their petroleum output even more than this Middle Eastern oil sheikhdom has: the U.S., Brazil and, yes, us: Canada.
The Biden administration, which is promising 2030 emissions will be half 2005 levels, has so far failed to stymie oil and gas development. U.S. petroleum and liquids production has soared by 33.9 per cent since 2015, reaching 20.3 mbd in 2022. Two-fifths of the increase has been on Biden’s watch. The U.S., not Saudi Arabia, is now the world’s leading oil producer, accounting for fully 20 per cent of global supply.
The Trudeau government has pledged that 2030 oil and gas emissions will be 42 per cent lower than in 2005. This has led to tensions with the oil- and gas-producing provinces, which are resisting emissions caps for oil, gas and electricity. Ottawa’s opposition to liquefied natural gas sales even as the U.S. and Qatar are making great inroads in the world market has had industry leaders scratching their heads. Even so, since the Liberals came to power in 2015, Canada’s oil and gas production has grown second fastest globally, at 26.7 per cent, to reach 5.6 mbd last year. Much of this growth is due to big investments in the oil sands before 2015 but the production increase has been accommodated by pipeline expansion, with the federally-owned TMX soon to come on stream.
Neither Biden nor Trudeau is attending COP28 but Brazil’s president, Lula de Silva, stormed in at the head of a delegation of 2000 to repeat a pledge to cut 2030 emissions to less than half 2005 levels. Much of reduction results from reforestation, however, not phasing out oil and gas. And, to the surprise of attendees, Lula announced that Brazil will align itself more closely with OPEC. No shock there. Since 2015, Brazil’s oil and gas production has risen by 20 per cent, making it the 8th largest producer in the world at 3.8 mbd last year. It now evidently sees itself as a player.
Besides the U.S. Canada, Brazil and UAE, only Iraq (at 10.4 per cent) and Kazakhstan (at 4.5 per cent) have seen their oil production grow faster than the world average since 2015. The rest have had little growth, with seven countries registering declines, including 22.4 per cent in Mexico and 36.7 per cent in Nigeria, the biggest drop anywhere.
The standstill or even loss in oil and gas production in many oil-producing countries since 2015 is due to several factors. Oil prices dropped by three-fifths after 2014 and the pandemic caused another crash. More recently, Saudi Arabia and Russia have persuaded OPEC+ to constrain production and push prices to over US$80 per barrel — mainly in order to replenish their treasuries. In some places, including Ghana, the U.K. and Norway, old fields are depleting. Elsewhere, but especially in Africa and Mexico, crime and political instability continue to discourage development. Finally, in the face of lagging demand, investors have encouraged companies to distribute profits rather than invest in greenfield oil and gas projects.
But top producers like the U.S. and Canada are not holding back and governments aren’t stopping them. Phase-out is all short-term cost in pursuit of climate gains that won’t be realized for decades, if at all. Nor are politicians willing to eliminate the tax revenues and high-paying jobs the industry generates. With energy security crucial in an increasingly dangerous world, oil-consuming countries are finding that intermittent renewable energy and other high-cost energy sources are no substitute for fossil fuels.
As the federal Liberals sink in the polls, they face a many-ways existential choice. Do they pursue their climate promises and phase out oil and gas? Or do they secure the benefits of oil and gas production for years to come? Or, a third option: do they say one thing but quietly do the other? Is it all, as Shakespeare would say, “much ado about nothing”?
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Just so we can frame this for everyone in the room, China will build 100 new coal plants this year. There is not a clean energy race. There is an energy race.
After a week spent watching hours of the various Senate confirmation hearings for some of President-elect Donald Trump’s cabinet nominees, one compelling thought lingers with me more than any other: Does Democrat Sen. Mazie Hirono of Hawaii have a seat on every Senate committee?
The answer to that is “no,” but it seemed that way as the Senator began her questioning of nominees ranging from Pete Hegseth (Defense) to former Florida Attorney General Pam Bondi (Justice) to former Republican North Dakota Gov. Doug Burgum (Interior) to Chris Wright (Energy) by posing some iteration of the following question: “ … since you became a legal adult, have you ever made unwanted requests for sexual favors or committed any verbal or physical harassment or assault of a sexual nature?”
Sadly, Hirono’s farcical style of questioning turned out to be less of an exception than a rule among the Democratic members of these committees as the week wore on. Democrat Sen. Tim Kaine of Virginia ended his questioning of Hegseth by literally asking if he had ever beaten his wife, an obvious smear which Hegseth denied.
It was all sad to witness, a troubling indicator of the health of both the Democratic Party and the American Republic. But what it all revealed by Friday is that the Democrats are unlikely to claim any scalps from among this week’s slate of nominees. Where energy policy is concerned, that means that the three departments/agencies that are most impactful in that realm are likely to be led by former Republican Rep. Lee Zeldin of New York at the Environmental Protection Agency (EPA), Burgum at the Department of the Interior and Wright at the Department of Energy.
Seldom if ever in this country’s history have three more capable, knowledgeable and effective individuals been in positions of leadership to help reform and recover from the waste and misallocation of taxpayer dollars that have characterized President Joe Biden’s 4-year presidency.
I have written several times here that the inevitable outcome that will result from pretty much every aspect of the Biden Green New Deal policies will be to render America dependent on China for its energy security, due to Chinese dominance of global processing and supply chains for all forms of and raw materials for renewable energy and electric vehicles. This is obviously not a sustainable situation, and it is clear that Trump and his key nominees fully understand that reality.
U.S. dependency on foreign adversaries is not limited to China. One such area involving a different country holds high stakes related to the goal of a renaissance in nuclear power often touted by Republicans and some Democrats alike.
In a revealing exchange, Wright and Republican Sen. John Barrasso of Wyoming discussed America’s recent dependence on Russia, of all countries, for imports of enriched uranium. As Wright pointed out, this is a technology first invented in the United States, but our country has virtually no existing capacity for uranium enrichment today. This is, as Wright called it, “a sad state of affairs” that has been caused in large part by wrong-headed federal environmental and permitting policies.
Unfortunately, the Biden cure for this pressing energy security matter could be even worse. As U.S. and NATO sanctions have gradually shut down Russia’s exports of enriched uranium, the U.S. nuclear industry has become reliant on imports from — you guessed it — China.
“As those [sanctions] shut down Russian uranium … we see more imports from China,” Wright testified. “We need to get beyond that … without shutting down the nuclear power plants we have running today. It is an area that requires urgent action.”
In another revealing exchange, Trump’s nominee for Treasury Secretary, Scott Bessent, disagreed with Democrat Sen. Ron Wyden of Oregon about the Senator’s claim that the United States is involved in “an arms race on clean energy” with China.
“Senator Wyden, just so we can frame this for everyone in the room, China will build 100 new coal plants this year. There is not a clean energy race. There is an energy race,” Bessent replied. Truer words were never spoken, and it is impossible to win that energy race when the United States is increasingly dependent on China for its very energy needs.
These and other Trump nominees have an enormous mess to clean up from the profligate spending and waste of the Biden years. Fortunately for the country, their work begins Monday. Not a moment too soon.
David Blackmon is an energy writer and consultant based in Texas. He spent 40 years in the oil and gas business, where he specialized in public policy and communications.
There has been a lot of talk about how Premier Danielle Smith did not sign a statement of support with the Government of Canada regarding a unified response to any tariff action taken by incoming President of the United States, Donald Trump.
While it is easy to throw stones at Premier Smith and call her actions one of selfishness, placing the interests of Alberta ahead of Canada, I think there are a number of reasons why one could reply that she was well within her right to act as she did. Over the last decade, Trudeau has gone out of his way to vilify the oil and gas industry, through his continual bad mouthing of the industry as being antiquated, and implementing policies that ensured that capital flight from the space accelerated, infrastructure projects were cancelled and massive levels of uncertainty were overlaid on the investment landscape going forward. Despite all this, the oil and gas sector still remains one of the most important economic contributors to the economy and is the largest component of exports from Canada to the United States, and it isn’t even close.
The Observatory of Economic Complexity (OEC)
The ironic thing of all this? To get oil to the refineries in the east, you need to IMPORT it by pipeline from the United States or primarily by ship to Quebec and New Brunswick. Had the Energy East Pipeline been built, Canadian refineries could have had Canadian domiciled product to satiate them. Moreover, had Northern Gateway been built, we would have diversified our client list beyond the United States. Sure, the Trans Mountain Pipeline was built, at extraordinary cost and timelines, and some “credit” is due to the Government getting it done, but the proof is in the current landscape that we operate in.
Now, coming back to the beginning. Why do I think Trudeau should look in the mirror before throwing rocks at Premier Smith? I come back to 2015 when Trudeau said Canada is the world’s “first postnational state” and that “there is no core identity, no mainstream in Canada.” He has gone about taking away what many of us grew up with, namely a sense of Canadian identity, and tried to replace that with shame and no collective identity. What is a post nation state you may ask? Post-nationalism or non-nationalism is the process or trend by which nation states and national identities lose their importance relative to cross-nation and self-organized or supranational and global entities as well as local entities.
So, is it any wonder that people are starting to question what is Canadian any more? At a time when Canada is under significant threat, the irony that Alberta likely represents the best tool in this tools (Trudeau) economic toolbox, is wildly ironic. As they say, karma’s a bitch.
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