For decades, Canada sold its oil to one customer. Now Ottawa, Alberta, British Columbia, and Indigenous partners are building something bigger than a pipeline: an exit strategy from US dependence.
As despicable, untrustworthy, and corrupt as Trump is, he has done one positive thing for Canada. He's brought us together like nobody else could....to resist him and to develop our resources to be ready to sell to the rest of the world. I won't see it in my lifetime, but I look forward to the day when the bulk of our trade goes east / west instead of south.
Glen Roberts has written a lot about Carney, using Elliot Jaques' "strata" scale to peg the PM as someone who thinks 25-50 years into the future -- meaning, what does he need to do NOW to achieve certain results in that future time frame. Few people can realistically think "that many chess moves ahead" -- likely explains why his economic thinking is top of the world right now.
But tying this to your post, there's two interesting observations I have about the Federal place with all of this -- especially as Green Party, environmentalists, Guilbeault, Angus, and others bemoan:
- First, oil is in extremely high demand these days. So the world really would like to buy our crude, if we only can get it to market. Traditionally, USA forced us to sell it at a discount to them "as we are your only customers, we're taking pity on you" (as they use our oil for 40% of their entire production). With the foreign interest in shipping west (to Asia) and someday east (to the Maritimes, who have to import oil from USA, and frankly Europe right now, as they scramble to find alternatives to Russia), that forces the sale of oil to market (or higher) prices (okay, so far, this is Captain Obvious). But the real sneaky thing: As Canada sells more and more oil to the rest of the world (at market or market+ prices), that intrinsically forces up the price that the USA has to pay for our crude! (well, for the next 10 years or so that it will take to get their Venezuela Territory's extraction system operating on all cylinders, and the ability to actually refine that oil (which they are not optimized to do)). So hidden benefit here, that gradually we get to "up the price" to USA over time.
- Second, if we were just supplying Canada and USA (status quo), the rough estimate is that we have about 100 years oil reserve. But as we ramp-up production and start selling to others (in larger and larger volumes), that reserve will decrease -- and this is where I think Carney is doing the 25-50 years forward thinking: IF the oil is largely GONE in 50 years, then the whole environmental problem goes with it! We sell it as quickly as possible now while we can make a ton of money from it, then pull a Norway and somehow bank some of it into our new Sovereign Wealth Fund (hmm, AB/SK will then likely complain that Carney is pulling a Trudeau Sr. and trying to steal all of their wealth . . . .) and plough all of that into building our super-renewable/nuclear electricity-powered economy, where we don't depend on others for fuel. So maybe that's in part why we're seeing "more environmental flexibility" happening -- because the more pipelines we build, the faster the (environmental) problem goes away?? I have to think more about this -- but Norway shows it can work, China is trying to get there, Europe is trying to get there, too (sorry Trump, more windmills happening within sight of your Scottish golf resorts!)
Finally Canadians are seeing the light. Our oil is a resource that will run out eventually. Alternative energy will continue to be developed. But the world's dependance on oil will be a fact of life for many decades to come. I'm hoping that the new jobs coming will inspire our younger generation to work with the Carney government and get to work! Not everyone can be a computer geek! I almost wish I could be 20 again like my granddaughter!
As despicable, untrustworthy, and corrupt as Trump is, he has done one positive thing for Canada. He's brought us together like nobody else could....to resist him and to develop our resources to be ready to sell to the rest of the world. I won't see it in my lifetime, but I look forward to the day when the bulk of our trade goes east / west instead of south.
I think a lot of Canadians feel the same way, Frank.
Trump may have done more to push Canada toward economic independence than any Canadian politician could have managed on their own.
Nothing focuses the mind quite like discovering how vulnerable you are to a single customer.
What we're seeing now is Canada slowly rediscovering an old lesson...
a country as large and resource-rich as ours should never depend too heavily on one market.
And who knows?
You may see more of that east-west shift than you think.
The groundwork is being laid right now.
Another great newsletter Fred! We are moving forward at least! Canada Strong!!!
Glen Roberts has written a lot about Carney, using Elliot Jaques' "strata" scale to peg the PM as someone who thinks 25-50 years into the future -- meaning, what does he need to do NOW to achieve certain results in that future time frame. Few people can realistically think "that many chess moves ahead" -- likely explains why his economic thinking is top of the world right now.
But tying this to your post, there's two interesting observations I have about the Federal place with all of this -- especially as Green Party, environmentalists, Guilbeault, Angus, and others bemoan:
- First, oil is in extremely high demand these days. So the world really would like to buy our crude, if we only can get it to market. Traditionally, USA forced us to sell it at a discount to them "as we are your only customers, we're taking pity on you" (as they use our oil for 40% of their entire production). With the foreign interest in shipping west (to Asia) and someday east (to the Maritimes, who have to import oil from USA, and frankly Europe right now, as they scramble to find alternatives to Russia), that forces the sale of oil to market (or higher) prices (okay, so far, this is Captain Obvious). But the real sneaky thing: As Canada sells more and more oil to the rest of the world (at market or market+ prices), that intrinsically forces up the price that the USA has to pay for our crude! (well, for the next 10 years or so that it will take to get their Venezuela Territory's extraction system operating on all cylinders, and the ability to actually refine that oil (which they are not optimized to do)). So hidden benefit here, that gradually we get to "up the price" to USA over time.
- Second, if we were just supplying Canada and USA (status quo), the rough estimate is that we have about 100 years oil reserve. But as we ramp-up production and start selling to others (in larger and larger volumes), that reserve will decrease -- and this is where I think Carney is doing the 25-50 years forward thinking: IF the oil is largely GONE in 50 years, then the whole environmental problem goes with it! We sell it as quickly as possible now while we can make a ton of money from it, then pull a Norway and somehow bank some of it into our new Sovereign Wealth Fund (hmm, AB/SK will then likely complain that Carney is pulling a Trudeau Sr. and trying to steal all of their wealth . . . .) and plough all of that into building our super-renewable/nuclear electricity-powered economy, where we don't depend on others for fuel. So maybe that's in part why we're seeing "more environmental flexibility" happening -- because the more pipelines we build, the faster the (environmental) problem goes away?? I have to think more about this -- but Norway shows it can work, China is trying to get there, Europe is trying to get there, too (sorry Trump, more windmills happening within sight of your Scottish golf resorts!)
Anyway, yes Fred, TONS of leverage!
Interesting angle, Grant.
The leverage piece is what most people miss.
Diversification isn't just about selling more oil.
It's about no longer being forced to accept whatever price a single customer decides to offer.
Your Norway comparison is worth thinking about too.
The real question isn't whether Canada develops its resources.
It's what we do with the wealth they generate while the world still wants them.
That's a very different conversation than simply arguing over the next pipeline.
Love the positivity.
Finally Canadians are seeing the light. Our oil is a resource that will run out eventually. Alternative energy will continue to be developed. But the world's dependance on oil will be a fact of life for many decades to come. I'm hoping that the new jobs coming will inspire our younger generation to work with the Carney government and get to work! Not everyone can be a computer geek! I almost wish I could be 20 again like my granddaughter!
You're right, Sandi.
The world is moving toward new energy sources, but nobody is flipping a switch and replacing oil overnight.
The opportunity for Canada is to use today's resource wealth to help build tomorrow's economy.
And I agree about young people.
There are going to be opportunities in trades, construction, engineering, technology, energy, and infrastructure.
A lot of the jobs ahead won't be behind a computer screen.
Your granddaughter is stepping into an interesting time to be young in Canada.
Canada has Energy America is left in the dust.