Prime Minister Justin Trudeau bought a pipeline in 2018, and then pushed through the building of the Trans Mountain Expansion project. For that, he deserves credit and thanks. It’s one of the most significant economic accomplishments of his time in office. It will pay dividends to our economy for decades to come.
But you’ll never hear his government or his party crowing about it. Nope.
How could they? TMX is (sigh) an oil pipeline. And the Trudeau government acts like there’s an omertà on that word: oil. In the Liberal style guide, it’s a four-letter word. Ministers and the PM try to avoid using it in polite company. Like other swear words, it only comes out under duress.
But under the duress of U.S. President Donald Trump’s threats, oil is suddenly being talked about, loudly and often. We are being forced to see things as they are, and to call them by their names.
Canada is not an “energy superpower” that exports lots of “energy” – these being the Trudeau government’s preferred euphemisms. We produce and export massive amounts of oil. We are on oil superpower. Oil, oil, oil.
We’re the world’s fourth-largest producer of oil, out-pumping every country in the Middle East save Saudi Arabia. Canada is also the world’s fifth largest producer of natural gas, ahead of all in the Mideast except Iran.
In 2023, Canada exported $192-billion worth of “energy” – $4-billion of electricity and $134-billion of crude oil and bitumen, plus another $54-billion worth of natural gas, coal and refined oil.
Canada has other successful industries, from auto manufacturing to agriculture to mining to banking. But we are one of the world’s biggest petrostates – and surely the only one whose voters are mostly unaware of it, and whose federal government is uncomfortable acknowledging it. In contrast, the eco-champion Norwegians know that they’ve grown wealthy from oil and gas, and are eager to continue to do so.
We’ve long had only one export customer for our hydrocarbons, to whom we have sold at a discount to world prices because we couldn’t summon the political will to build pipelines running to the Atlantic or Pacific. But with the White House questioning even that U.S.-favourable arrangement, Canada has had to take a hard look at how we do business.
We can’t change U.S. policy. We can stop shooting ourselves in the foot. Here’s where to start:
1. Ottawa should finance one (or more) new pipelines: The Trudeau government did the right thing sinking public money into building TMX. Despite significant cost overruns, the project is already an economic winner. It makes it possible to ship 890,000 barrels a day to where oil prices are higher, beyond the U.S.
Last April, the Bank of Canada estimated that the new pipeline would add a quarter percentage point to Canadian economic growth.
A careful analysis will be needed to determine which pipeline (or pipelines) should get federal backing. Maybe the best course is reviving Northern Gateway to the Pacific. Or Energy East to the Atlantic. Maybe there are other options.
But the necessity of doing something, and of federal financial muscle to get it done, is the same as the case for building the Canadian Pacific Railway in the late 19th century. Canada is in political peril if we allow the trade of our most important commodity to remain so dependent on the U.S.
And whereas building the CPR imposed economic costs – north-south trade was cheaper, but east-west trade was the price of nationhood – getting more oil and gas to tidewater is national insurance that will more than earn back its premiums, through higher prices.
2. Eliminate interprovincial trade barriers. We can’t stop the U.S. from tariffing our exports, but why are we roadblocking the movement of our own goods, services and workers between provinces?
The country is rightly freaking out over the possibility of a 25-per-cent tariff on shipments to the U.S., but the provinces have trade walls that a 2019 IMF study estimated are equivalent to a 21-per-cent interprovincial tariff.
The average barrier with the U.S. is equal to a 3-per-cent tariff.
But facing the Mar-a-Lago Menace, Canada might just get its act together. Conservative Leader Pierre Poilievre is right to be calling for Ottawa to use the power of the purse to nudge provinces into dropping barriers. And Minister of Transport and Internal Trade Anita Anand said on Wednesday that the momentum and consensus may be there to liberate internal trade within just 30 days.
Thanks, Donald.