By Mark Milke
and Lennie Kaplan
Canadian Energy Centre
In a world where Russian President Vladimir Putin is widely assumed to be behind the poisoning of opposition leader Alexei Navalny, liberal democracies should stick together. This should be especially relevant on matters related to energy.
Russia has been using energy exports as a weapon for more than a decade. In 2009, Russia cut off the natural gas supply to Ukraine in mid-winter, ostensibly over a pricing dispute but in reality it was an attempt to control Ukraine.
That example and others are why some German lawmakers, including the head of the parliamentary committee on foreign affairs, want to cancel Russia’s nearly complete Nord Stream 2 natural gas pipeline that deadheads in Germany.
German politicians want the pipeline killed because they fear their country will become overly reliant on an autocracy that targets political opponents.
In contrast, some American politicians are targeting pipelines from a friendly nearby liberal democracy – Canada.
One of new American President Joe Biden’s first acts was to cancel the presidential permit for the Keystone XL pipeline. Meanwhile, Michigan Gov. Gretchen Whitmer has been trying for months to kill off Enbridge Line 5, a pipeline that has delivered oil and natural gas liquids since 1953.
In reality, Americans and Canadians are better off continuing policies that have served both countries well since at least the 1973-74 energy crisis.
Historically friendly and complimentary Canada-U.S. policy is in part why total energy flows between the two nations have been worth nearly $2 trillion since 2000. Canadian oil helps keep the American economy humming and natural gas helps keep American homes warm. To a lesser degree, U.S. energy exports to Canada do the same for Canadian homes and businesses.
Multiple energy products make their way across the border, including electricity, coal and nuclear power. But it’s mostly the transborder trade in oil and natural gas (worth over $1.6 trillion between 2000 and 2019) that powered economies on both sides of the border and kept homes warm.
For example, as the Michigan-based Mackinac Center for Public Policy think-tank points out, Line 5 provides nearly 65 per cent of the propane needed to heat 330,000 homes in Michigan’s Upper Peninsula.
The Mackinac Center notes how, without Canadian natural gas through Line 5, those 330,000 Michigan households would each have to spent US$25,000 to convert their home heating from propane to electric. After that, they’d pay US$3,500 in extra heating costs annually.
Out of $138 billion in energy products shipped in 2019, roughly four-fifths were from Canada to the United States (about $112 billion). American exports to Canada tallied about $26 billion that year.
Texas and North Dakota respectively shipped $9.6 billion and $3.5 billion worth of oil into Canada in 2019. Michigan sent nearly $1.5 billion in natural gas north to Canada and New York sent gas worth $517 million north.
Whether measured in dollars or homes heated, U.S-Canada energy trade is significant. It takes place between two liberal democracies whose last war took place over two centuries ago. It’s not as if Canadian companies are going to shut off natural gas supplies to the United States in mid-winter, as Russia did to Ukraine, or cut off oil shipments to Americans, as the Organization of Petroleum Exporting Countries (OPEC) did in 1973.
Friends – especially friendly liberal democracies – don’t let their politicians attack each other. All that does is help our non-liberal competitors.
Mark Milke and Lennie Kaplan are with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes. They are authors of the report Nearly $2 Trillion in Energy Trade Flows between Canada and the United States: Trends from 2000 to 2019.
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