Commentary: Informed opinions on the future of oil versus uninformed agendas

'Most people don’t know just how much foreign oil has been imported into Canada, which provinces are buying it and where it originates'

By Mark Milke and Lennie Kaplan
File photo

When forecasting future oil consumption around the world, many people have opinions and agendas, but forecasts rooted in facts and technological capabilities are rarer.

An example of an informed opinion comes from Vaclav Smil, professor emeritus in the faculty of environment at the University of Manitoba. Smil, for those who are unfamiliar with him, is a world-renowned expert in energy transitions. He would prefer a move away from fossil fuels and also accepts that carbon emissions contribute to global warming.

However, Smil’s data-based, empirical work and his resulting view on a possible transition from fossil fuels was summed up in his recent paper for the University of Saskatchewan’s Johnson Shoyama School of Public Policy: “Designing hypothetical roadmaps outlining complete elimination of fossil carbon from the global energy supply by 2050 is nothing but an exercise in wishful thinking that ignores fundamental physical realities.”

That context is critical for Canadians. It means that the key choice for those anchored in reality is more straightforward: for the next few decades at least, Canadians will continue to use oil. The only question is where it will come from — i.e., from domestic or foreign sources, or both (most likely) and in what proportions.

Our guess is that most people don’t know just how much foreign oil has been imported into Canada, which provinces are buying it and where it originates. This matters because, while some rhetorically oppose oil, the reality is that domestic oil consumption needs will be met either by Canadian sources, or with imported foreign oil.

On oil imports, here is what we found: Canada imported over 8.7 billion barrels of crude oil from other countries between 1988 and 2019, an average of nearly 749,000 barrels per day. Those foreign barrels of oil were worth $477 billion in nominal dollars.

Many of the source countries have changed over the decades. Initially, much of the foreign oil arriving in Canada came from the United States, Norway, the United Kingdom and Algeria. Those are the top four sources of foreign oil when all three decades worth of oil imports are tallied up.

But dive into data between 2010 and 2019, and the top two suppliers alone, the United States and Saudi Arabia, account for $100 billion worth of foreign oil imports ($75 billion from the U.S and $25 billion from Saudi Arabia). That accounted for 46 per cent of the $220 billion in foreign oil imports over the last decade.

Algeria and Norway were next with oil sales to Canada worth $17.1 billion and $16.8 billion, respectively, with multiple other countries supplying the rest in smaller amounts. (Russia, for example, exported $2.2 billion worth of oil to Canada over the last decade.)

Narrow down oil imports just to 2019 and the Americans and Saudis are even more dominant. They shipped oil worth $13.8 billion and $3.1 billion, respectively, into Canada, representing 89 per cent of the $19 billion in total foreign oil imports last year.

As to where the $477 billion in foreign oil imports between 1988 and 2019 ended up, fully $225 billion, or 47 per cent of all foreign oil, flowed into Quebec. Next in line was New Brunswick with $129 billion, or 27 per cent (explained in part by a refinery in Saint John). The other provinces took the remaining 26 per cent.

There are a number of factors that explain Canada’s level of foreign crude oil imports, including the type of oil a refinery processes and ongoing pipeline constraints. Given such complexities and the need for open markets and flexibility of supply, it would be a mistake to advocate protectionist measures.

But where governments can make it easier for Canadians to develop domestic oil supplies, be it in Newfoundland and Labrador, Quebec (which has reserves), Saskatchewan, British Columbia or Alberta, it would be reasonable to do just that.

Mark Milke and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded in part by taxes paid by industry on carbon emissions. They are the authors of “Foreign oil imports to Canada: $477 billion between 1988 and 2019.”