by Daniel Lang
In the Senate, we have been considering a recent report on Canada’s energy sector—Now or Never, Canada Must Act Urgently to Seize its Place in the New Energy World Order. It is important that all Canadians understand how vital our energy resources are to the economy, and the challenges that lie ahead for us.
The energy sector plays a vital role in keeping Canada strong, free and prosperous. It employs over half-a-million Canadians and contributed a staggering $94 billion to our country’s exports in 2010. It also contributed $35 billion in taxes and royalties in 2008 to various levels of government. With oil production set to double by 2030, these contributions to our tax base and our living standards will prove crucial to all Canadians. I stress all Canadians. Even provinces without abundant oil resources will share in the wealth through transfer payments.
The energy sector is the largest private-sector employer in Canada. Young Canadians need to be introduced to the opportunities in the energy sector as they plan their careers. Moreover, these opportunities must also be accessible to all Canadians, including aboriginal youth, 400,000 of whom will be eligible for the workplace between 2012 and 2020.
But none of this potential prosperity can be taken for granted. Canadians face significant challenges on the road to fully developing these natural resources.
First is the prospect of our biggest customer becoming self-sufficient for its petroleum needs. Energy experts believe the United States may soon no longer need to import oil, and could become a major exporter of natural gas.
Second, Canada loses approximately $28 billion a year in revenue from oil sales to the U.S. Because we do not have access to a diverse global market, there is a glut of Canadian oil that can only be sold to the U.S. This drives down the price our oil can get to below the going rate on the world market. Yet building pipelines to ease this bottleneck faces serious regulatory and environmental challenges.
Third, Canada is facing increasing competition from other oil and gas exporting countries. In the past month, major oil and gas discoveries off the coast of Malaysia, Israel and Mexico have been reported. And the prospect of a natural gas pipeline from Alaska’s north coast to Valdez is closer to becoming a reality.
Fourth, greater efforts must be made to remove barriers to labour mobility, and more must be done to increase trades and apprentice training as part of a national labour strategy, rather than depending on temporary foreign workers.
Canada must seek out and embrace new opportunities and new markets or risk a reduction in our living standard. It is also time we looked closer to home if we are to become truly energy independent. Canada produces enough oil and gas to be self-sufficient, yet we are importing 778,000 barrels per day of crude oil from countries such as Saudi Arabia and Venezuela. The $40 billion we spend buying foreign oil each year is money better spent developing our own resources for export.
That’s why our report embraces the notion of shipping oil from western Canadian to eastern Canadian markets. Western Canadians have reason to be wary of anything that sounds like a new National Energy Plan. But the reality of oil economics is different today. Higher prices can be achieved for this oil in eastern Canada than in the American Midwest.
Enbridge has confirmed that they have applied to the National Energy Board to reverse the flow of an existing gas pipeline to provide western crude to refineries in Ontario and Quebec. The company is also actively pursuing talks with the government of New Brunswick about the possibility of building a new pipeline from Montreal to Saint John—where the oil can then be exported to international markets. Canadians should embrace both these proposals.
The Senate Report on Energy could not have been timelier. Our mission was to set the scene for all Canadians to grasp what is at stake—namely our economic prosperity and our ability to fund infrastructure and social programs across the country. I invite all Canadians to read the report and follow the debate in the Senate.
Senator Daniel Lang represents Yukon and serves on the Energy, Environment and National Resources Committee and on the Standing Committee on National Security and Defence. The report is available on the committee’s website.