Canada: Please buy our dirty oil

A new American law could limit oil-sands production in Alberta

CANADIANS like to think that although they are the junior partner in their trade relations with the United States, the 174 billion barrels of proven reserves in the oil sands of Alberta provide a powerful ace up their sleeve in any dealings with their energy-hungry neighbour. That belief has now been shaken by an American law that appears to prohibit American government agencies from buying crude produced in the oil sands of the western province.

The Energy Independence and Security Act 2007 did not set out to discriminate against Canada, America’s biggest supplier of oil. But that is the effect of banning federal agencies from buying alternative or synthetic fuel, including that from non-conventional sources, if their production and use result in more greenhouse gases than conventional oil. Transforming Alberta’s tarry muck into a barrel of oil is an energy-intensive process that produces about three times the emissions of a barrel of conventional light sweet crude.


Having woken belatedly to the danger, the Canadian government is now scrambling to secure an exception. Michael Wilson, Canada’s ambassador in Washington, has written to America’s secretary of defence, Robert Gates (whose department is a big purchaser of Canadian oil), stressing American dependence on Canadian oil, electricity, natural gas and uranium imports, and noting that some of the biggest players in the Alberta oil patch are American companies. Mr Wilson added plaintively that both George Bush and his energy secretary, Samuel Bodman, have publicly welcomed expanded oil-sands production, given the increased contribution to American energy security.

John Baird, the Canadian environment minister, referred this week to the American move when he unveiled new proposals to reduce industrial emissions in Canada, including the oil sands, by 20% by 2020. Big states like California were making similar pronouncements, he told reporters. The oil sands were an important national resource, but had to be expanded in an environmentally friendly way.

The Economist