MNI INTERVIEW: Canada Needs Broad Response To US Oil Threat

Canada needs a range of new resource projects and overseas markets to counter U.S. threats to its sovereignty as President Donald Trump’s move to seize Venezuelan oil reserves underlines the risk of relying too heavily on crude exports, top former government adviser Rachel Samson told MNI.

“It is another of many wake-up calls for Canada, but I worry that the response to it is just that we need another oil pipeline," said Samson, who served 15 years in the bureaucratic arm of the prime minister's office, in the departments of finance, natural resources and environment, and is now at the IRPP think tank. 

"We need to think not just about oil because there are broader risks to oil demand that aren’t related to the U.S.-- China’s oil demand is expected to peak around 2027. It’s about what are the other products that we know are going to be in huge global demand,” she said. Other sources of energy, critical minerals and agricultural products are items with good prospects in her view.

A revival of Venezuela's oil production would make developing new projects in Canada riskier at a time when low global prices already make those investments difficult, Samson said. That includes Alberta's bid to find a private investor to build a new pipeline to the west coast, something Premier Danielle Smith said is vital to the nation's future. (See: MNI INTERVIEW: Alberta Says BC Pipeline Must Be Fast-Tracked)

INVESTMENT ATTRACTIVENESS 

“Venezuela, even if they aren’t supplying the Gulf Coast of the U.S., they are supplying somewhere else, particularly if it’s lower cost, then it can harm Canada’s investment attractiveness," Samson said. 

Some Canadian oil stocks declined this week after the U.S. removed Venezuela's leader and Desjardins analysts say the discount of Alberta's heavy oil relative to Texas crude is likely to widen. 

“This is the part of the whole challenge that Canada faces about the future of its oil sector, and the bets that governments are going to have to place because a lot of these risks are too much for private investors,” Samson said. 

Prime Minister Mark Carney has made private investment a key condition for fast-tracking the Alberta pipeline. He told reporters Monday that “Canadian oil will be competitive because it is low risk, clearly low risk, low cost.” 

With Trump officials talking about moves on Greenland and control over a wide region around its borders, threats to Canada extend beyond the economy, Samson said. Diversifying trade is needed to shield Canada in trade talks this year where U.S. officials will seek more concessions, she said.

OWNING THE HEMISPHERE

“They seem to be very focused on controlling resources in particular, but they’ve also mentioned the hemisphere, in terms of owning the hemisphere and controlling all of the resources and actions of that hemisphere,” she said. “We need to diversify enough to the point where they cannot have this leverage over us, to say if you don’t do this thing that I want you to do today, we’re going to impose economic calamity."

That transition will be difficult after a long era of reliance on the United States, Samson conceded. Before Trump raised tariffs, Canada sent three-quarters of its exports to its southern neighbor, and officials have said a million jobs could be at risk in a nation of about 40 million people.

Carney's challenge is getting a deal acceptable to voters still angry about Trump's remarks early in his presidency about making Canada a U.S. state. “I don’t think Canadians would accept anything that lessens our sovereignty or independence," Samson said. "That’s probably the line that they can’t cross, and that’s something that the Trump administration clearly wants to cross.”