Oil tankers anchored in Muscat, Oman on March 7. With US$100 barrels of WTI crude, RBC is projecting inflation heading into the 3-per-cent range for Canadians this year.Benoit Tessier/Reuters
John Turley-Ewart is a contributing columnist for The Globe and Mail, a regulatory compliance consultant and a Canadian banking historian.
Canada wasn’t forewarned. Bombs rained down on Tehran on Feb. 28 and neither the Americans nor the Israelis conferred with us. But the calls flooded in the next day from allies and trading partners who feared their supplies of oil and liquefied national gas (LNG) would be cut off by Iranian military operations in the Strait of Hormuz.
More than a decade ago, Canadian leaders recognized that pouring funds into our armed forces wasn’t a policy that won elections. A peace dividend was easier to sell. But Canada possessed one geopolitical asset that carried more value for allies and trading partners alike: a secure, abundant source of energy allies and trading partners could draw on in good times and rely on in times of adversity to keep their economies running smoothly. It would also expand the Canadian economy in the process, compounding the peace dividend.
Ports were dredged off the B.C. coast to accommodate supertankers from the Pacific region that had long sought energy stability. Pipelines were built to carry oil and LNG to those markets along with large storage facilities in Alberta and on the B.C. coast itself – strategic energy reserves that could be filled by Ottawa when oil and LNG prices were low and released when needed.
Even TC Energy’s natural gas mainline into Ontario and Quebec was expanded and its Line 2 reopened to bring natural gas from the West to Eastern Canada, where new LNG plants supplied markets across the Atlantic. To that was added new oil pipelines to supply Quebec and Atlantic Canada refineries with Canadian oil to ensure energy independence.
Canada supplying 23.6 million oil barrels under IEA release plan
When German chancellor Olaf Scholz visited Canada in August, 2022, five months after Russia’s invasion of Ukraine, he came with a request: Help Germany and the EU get off Russian gas. Canada’s prime minister at the time, Justin Trudeau, shook his hand and assured him his government had his back. Allies could rely on Canada.
Nothing of the kind happened, of course.
Mr. Trudeau rebuffed German overtures, saying there wasn’t a business case to be had for LNG export terminals on Canada’s East Coast. Now, if the chancellor wanted green hydrogen, well that was something to discuss.
When Prime Minister Mark Carney received a standing ovation from many world leaders in Davos, Switzerland, it wasn’t only the words that inspired, but the thought that Canada might, this time, just fully appreciate how it could serve as an energy anchor for its allies.
Canada could fortify their economies against Russian aggression in Europe and Iran’s theocratic, fascist government so obsessed with Jew-hatred that it has and would continue to turn the Middle East upside down to secure a chance at incinerating Israel.
It will take time, maybe time much of the world doesn’t have now. With US$100 barrels of WTI crude, RBC projects inflation heading into the 3-per-cent range this year for Canadians, an inflation surge most are ill-prepared to absorb.
The pinch of higher oil prices will sting global economies too. To try and mitigate the economic pain, the International Energy Agency’s 32 member countries, Canada included, decided last week to release 400 million barrels of oil reserves into the market, a historic move meant to help calm markets and lower fuel prices on Main Street.
The United States and Japan will be the largest contributors to the release. Canada? This country doesn’t have oil reserves, leaving its Energy Minister, Tim Hodgson, going cap-in-hand to Canadian oil producers asking if they can produce more while assuring IEA members “we will do our part.”
The result was underwhelming. Late Friday Mr. Hodgson said Canada would contribute 23.6-million barrels to the IEA’s plan, though it’s unclear if that’s 23.6-million on top of current production. Our pipelines are at or near capacity. Canada is a “just-in-time” energy producer with infrastructure that couldn’t pump much oil and natural gas from strategic reserves even if we had them.
Following his Friday statement, Mr. Hodgson said that Canada’s contribution to the IEA would amount to 140,000 additional barrels per day and is simply part of already-planned production increases. For context, 140,000 bpd is a mere 2.6 per cent increase.
As Pierre Poilievre rightly noted in his Economic Club of Canada speech last month, Canadian governments have consciously pursued policies that make it hard to export our energy products. Allies in the Pacific region, such as Japan, South Korea and Taiwan, are in times like this, left to their own devices.
So too are NATO allies and European trading partners.
Mr. Carney is now famous for saying we must see the world as it is. What this war with Iran helps us see is Canada as it is. Not a middle power, but a minor player – for now.