Action Alerts | PMA's newsletter | What's on | Links | How PMA can help you
Help PMA grow | Petition forms | Site map | PMA main page

 

Action Alert picture

With U.S. Self-Interest, Don't Expect Change


24 October 2001

Americans guzzle oil. They account for 5 per cent of the world's population but consume a quarter of its daily oil output.

Before Sept. 11, the Bush administration seemed fixated on promoting more domestic supplies of oil and other fossil fuels. They're fixated by other matters these days, but, whenever Americans refocus on energy, they'll want safer supplies at home and abroad. When they look abroad, they're going to see Canada.

Sept. 11 will drive home to Americans that the Middle East can be a tremulous region, loaded with oil but also with potentially nasty surprises. They've found that out before, but now questions are being asked about the long-term stability of Saudi Arabia, the No. 1 U.S. supplier and birthplace of Osama bin Laden and other key members of al-Qaeda.

Oil companies and the U.S. government will be re-examining their dependence on the Middle East and looking for sources from more politically stable places. The shift won't occur overnight, but it will happen. And when it does, through a series of company decisions and revised U.S. strategic analyses, Americans will want more oil (and other forms of energy) from reliable partners.

The U.S. now imports 2.5 million barrels of oil a day from the Middle East, about the same amount from South America (mostly Venezuela), 1.8 million barrels from Canada, and 1.4 million barrels from Mexico. Canada's conventional oil supplies can rise with more offshore development, but the oil sands are sitting there, offering vast additional quantities.

Similarly, when U.S. buyers want another energy product, they'll be looking for more natural gas. Where else to find that but Canada?

For better or worse, Canada locked itself into a continental energy model long ago. The Canada-U.S. free-trade agreement cemented the model so that Canada is now largely dependent on the U.S. market and capital for further expansion. The cycle is complete. The more Canadian companies discover, exploit and desire to transport, the more important becomes the U.S. Market And the more money is needed to support all that exploration, exploitation and transmission, the more U.S. capital is required. Bye-bye Canadian firms.

The Americans already knew that, as a rash of U.S. takeovers of Canadian energy companies demonstrated. One by one, Canadian companies became U.S. ones in 2001, including Gulf Canada Resources, Chieftain International, Anderson Exploration, Westcoast Energy, and Canadian Hunter. The total buying price for these Canadian companies: $27-billion.

Westcoast and Canadian Hunter, in particular, were Canadian jewels: well-managed, highly profitable and resolutely Canadian, with head offices in Western Canada. They now will be run from head offices in Texas, Oklahoma and North Carolina, where some of these companies' head-office personnel will move. The takeovers mean that almost half of Canada's energy industry is now foreign-owned, a development cheered on by the business press.

More of it is on the block as shareholders and managers seek personal riches and companies hunt for additional cash to expand. These sellers are certainly willing, and very soon they will find even more interested U.S. Buyers.

Americans enjoy the Western world's cheapest gasoline. American cars and sport utility vehicles consume 10 per cent of the world's daily oil supplies. The Bush administration, pre-Sept. 11, wanted those pricing and consumption patterns to continue forever. Conservation got tacked on to the Bush energy plan almost as an afterthought. Even if Americans begin to conserve, they'll still remain huge energy importers. They have somewhat reduced their dependence on OPEC for oil imports since the 1980s, from 62 per cent to 42 per cent. They'll be trying to lower that share further, especially from Middle Eastern OPEC members, once they understand the new instabilities on that region caused by the Sept. 11 attacks and their fallout.

The ever-tightening energy links between Canada and the U.S. that will flow from Sept. 11 will be part of a pattern. Canada will be squeezed as never before to adopt U.S. models, copy U.S. laws and regulations, or adapt Canadian ways to accommodate the U.S.

Canada, doing 86 per cent of its trade with the U.S., is now almost totally dependent on that country's decisions, whims and preferences. A few months ago, Canada talked tough on softwood lumber; now, it's ready to cave by negotiating a deal, part of which will be a slow adaptation of domestic lumber practices to American preferences.

Canada will be pressed to conform on border security, refugee determination, foreign and defense policy, energy, business practices, trade -- anything that touches Americans' sense of self-interest and vulnerability. This was the way of North America pre-Sept. 11. That day's tragedy will accentuate the pressures.

Jeffrey Simpson.
Published in the Toronto Globe & Mail.
2001 Globe Interactive.



Index page on Response to attacks in US

 

Click here
Click here
Click here
Click here
Click here
Click here
Click here
Click here
Action Alerts PMA's newsletter What's on where Peace links Help PMA grow How PMA can help you Petition Forms Site Map