Western Desk World News

Why Does Canada Import Oil?

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Why does Canada import oil? Economics. The bottom line is importing oil is more cost effective for some companies than purchasing Canadian oil. There is no conspiracy to stop Alberta oil from being purchased in Canada.

Even if the Energy East pipeline was built, Irving Oil’s President said they would continue to purchase Saudi Oil.

“Imports from Saudi Arabia, which started when the refinery opened in 1960, are compelling because of low transportation costs on large tankers.” (1)

““We will add Western Canadian crude to our portfolio as the economics dictate, but probably not at the expense of our Saudi barrels.””

Unfortunately for Alberta, economics led to the demise of the energy east pipeline and economics is the reason Canadian companies import foreign oil.

Adding to the problems for Alberta is that no refineries in Eastern Canada are able to refine oilsands bitumen. (2)

Some people are under the impression that the Federal government can force companies to purchase Canadian Oil. If we didn’t live in a democratic, free-market economy that might be true, but it isn’t.

We are required to follow international agreements like the World Trade Organization and NAFTA. If we banned imports of oil, we would be sued or Canadian industries would face tariffs.

Also, it’s not in the best interests of the country to force companies to purchase a more expensive product. It would only make those companies less competitive.

Monopolies, by their nature make the cost of things more expensive. Jason Kenney is already making the price of gasoline higher for Canadian consumers by his curtailment policies. (3)

Just like OPEC or other industry organizations, Kenney is artificially reducing the supply of oil which is making the cost oil higher and hence gasoline more expensive for Canadian consumers. That price increase is far more than a carbon tax yet nobody is complaining about curtailment.

Now imagine if Kenney had a monopoly in Canada? Just imagine how much more expensive things would get for Canadian consumers.

We don’t force Albertans to purchase trucks made in Ontario or underwear made in Nova Scotia. Forcing Canadians to buy oil simply because it was produced in Alberta doesn’t make sense either.

If you want Canadian companies to stop importing foreign oil, then Jason Kenney will need to negotiate contracts with Eastern refineries to make it economical. If Kenney can’t do that, then maybe he needs to find another job.

(1)
https://business.financialpost.com/commodities/energy/irving-oils-president-says-it-would-keep-saudi-imports-even-if-energy-east-goes-ahead

(2)
https://thenarwhal.ca/oil-export-tar-sands-bitumen-cannot-be-refined-eastern-canada/

(3)
https://www.cbc.ca/news/canada/calgary/alberta-oil-curtailment-extended-1.525384

By Jackie Amable