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Why Americans need Canadian oil

Given US dependence on imported oil, Americans must clearly understand who their human rights-respecting friends are.


August 8, 2011
by Mark Milke

In a recent book on women’s rights in the Middle East and North Africa, Eleanor Abdella Doumato chronicled the Saudi prohibition on political parties, the lack of free speech, restrictions on the media, religion and assembly, the illegality of trade unions and the severe restrictions on women’s rights. Over in Russia, Amnesty International noted how, in 2010, “human rights defenders and independent journalists continued to face threats, harassment and attacks.”

Those two countries are the world’s top two oil producers and exporters but they’re hardly an exception among oil-rich countries. Combining oil export data with measurements from Freedom House, a US-based think tank that tracks a variety of liberties, Canada is one of only two countries among the world’s top 15 net oil exporting countries considered “free” in its comprehensive freedom ranking. (Norway is the other.)

Three countries – Kuwait, Nigeria and Venezuela – are classified as “partly free.” The rest, classified as not free, include: Saudi Arabia, Russia, Iran, United Arab Emirates, Angola, Algeria, Iraq, Libya, Kazakhstan and Qatar.

Americans should take note. Rhetoric about the need for energy independence notwithstanding, the trend-line for US oil imports has been “up” for decades, except during recessionary years. Almost four decades after the 1973 oil embargo by some Middle Eastern countries, the US now imports 5.5 million more barrels daily than it did then.

They should also consider the link between a poor human rights record and instability, as the recent Arab Spring uprisings in Tunisia, Egypt, Syria, Bahrain and oil-exporting Libya demonstrate. Governments that repress their populations, in addition to being morally problematic, are hardly reliable exporters.

Given US dependence on imported oil, Americans must clearly understand who their human rights-respecting friends are and the consequences of any artificial restrictions on Canadian oil imports.

For example, in 1979, the year of the Iranian revolution and when American diplomats were taken hostage, Canadian oil constituted just 6.4% of all US oil imports. That was similar to Iran’s share in the year just before the revolution (6.1% in 1978). Imports of Iran’s oil were cut in half in 1979 and ceased in 1980.

Since then, while other nations have fluctuated in terms of their importance to the US oil import market, Canada’s crude has grown.

Dominant fuel
By 2009, Canada accounted for 21.2% of all oil imports to the US, and is now America’s biggest supplier. That was more than all Persian Gulf countries at 14.4%, which is down significantly from 1979 when Gulf countries accounted for one-quarter of all US oil imports.

The International Energy Agency forecasts oil will remain the world’s dominant fuel for the foreseeable future. It predicts 99 million barrels in daily consumption by 2035, up from 86 million now. That same agency also predicts that unconventional oil – think Canada’s oil sands – will play “an increasingly important role in world oil supply through to 2035, regardless of what governments do to curb demand.”

To wit, Canada is the only major world oil producer that already exports significant amounts of crude oil to the US; in part because of its longstanding positive record on civil, political and economic rights.

Looking ahead, there’s a third advantage: Canada has the potential to greatly reduce US dependence on non-North American oil. That reality can help the US avoid any economic and policy shocks that might result from an over-reliance on countries with unpredictable, and in some cases, undesirable regimes.

Mark Milke directs the Fraser Institute’s Alberta office and is author of In America’s National Interest – Canadian Oil: A Comparison of Civil, Political and Economic Freedoms in Oil-Producing Countries. Visit www.fraserinstitute.org.