Newswise — Canada, on the surface, appears to be an oil-rich nation. In fact, we’re one of a limited number of countries that actually produce more crude oil than we consume.
So why does Eastern Canada depend on international imports for the majority of its oil supplies?
“People rarely stop and think about where it all comes from,” says Larry Hughes, head of the Energy Research Group, part of Dalhousie’s Department of Electrical and Computer Engineering. “Most people would probably guess Alberta, which is a reasonable assumption given that they do produce enough to meet most of Canada’s oil needs. But that’s not how things actually work.”
In fact, the boom in the Alberta tar sands has largely been driven by energy export provisions in the North American Free Trade Agreement (NAFTA), which has shifted the flow of domestic oil away from other provinces and towards the United States. In a new paper published in the journal Energy Policy, Dr. Hughes explores the changing dynamics of Canadian oil trade and offers stern warnings about the state of energy security in Ontario, Quebec and here in Atlantic Canada.
“The stability of our oil supply is crucial in everything we do,” he says, noting that oil is particularly important in provinces such as Nova Scotia and Prince Edward Island where a large number of homes are heated with it. But it’s more than just heating and shelter. “Our entire economy is based on a presumption of inexpensive oil: from traveling and commuting to shipping goods and food products. A dramatic change in either access to oil or its price threatens to break down the entire system…it’s literally the fuel of globalization.”
In 2007, eastern Canada consumed 482 million barrels of crude oil. Only 83.5 million of which came from Alberta – and all of it was used in Ontario. Eastern Canadian crude, the majority of which comes from reserves off the shores of Newfoundland and Labrador, totaled 139.5 million barrels that same year but over half of it was exported to the U.S.. Under the status quo, Canadian crude cannot be counted upon to meet eastern Canadian demand.
With Newfoundland and Labrador’s production of crude oil falling, eastern Canada is increasingly dependent on international supplies of oil. In the Atlantic Provinces, for example, almost 80 per cent of our oil comes from outside Canada, from countries such as Algeria, Norway and the United Kingdom. But oil production in many of these countries has reached a plateau or is in decline, meaning that our region will be competing with the rest of the world for oil from a limited number of exporting countries such as Iraq and Saudi Arabia.
All of this puts eastern Canada – and the Atlantic provinces in particular – at severe risk to major changes in global oil trade. Organizations like the International Energy Agency are reporting that oil production worldwide may be peaking, while the United States’ Energy Information Administration estimates that the price of a barrel of oil could reach $200 within the next 20 years.
So what to do about it? “We’ve got to refocus our policies around the four ‘R’s of energy security,” says Dr. Hughes. By that, he means: reduce our energy use, replace insecure sources, restrict use through regulation to control demand and continue to review the situation. But he admits that the policy front remains a challenge, as governments don’t make it a priority.
“I don’t think it’s on the radar,” he says. “The only time it comes into conversation is when oil prices go up. We must do better.”
RSS