It's no mystery - the turmoil in oil producing and transporting countries in North Africa and the Middle East is responsible for the $10 surge in oil prices in the last two weeks. And the loonie, as a petro currency, has risen along with it to $1.02 U.S.
This is all good for the Canadian oil industry, but not at all good for Canadian exporters. We are a trading nation and the U.S. is still our biggest customer by far, accounting for about 75 per cent of our exports. It's a good time for Canadians to vacation in Florida, and a good time to buy orange juice from Florida, but not a good time for selling Canadian products in Florida.
And when the supply of oil is disrupted by political events, as it has been in North Africa and the Middle East, the price of oil spikes. Consider the Suez Canal. Estimates vary, but run as high as four million barrels a day moving through the canal and the pipeline alongside it. That would be about 4.5 per cent of the world's daily consumption.
Then Libya, which produces 1.6 million barrels a day, or nearly two per cent. As for Bahrain, the tiny kingdom in the Persian Gulf, it only produces 48,000 barrels a day, but it's connected to Saudi Arabia.
The flowering of the democracy movement in the region is a wonder to behold. People across North Africa have found the courage to go into the street and take back their countries from the hands of autocrats and in the case of Libya, from a raving lunatic. To the question of who, or what, after Moammar Gadhafi, the obvious answer is that anyone, or anything, would be an improvement. The massive failure of intelligence services to predict any of these revolutions is probably a current conversation. But after the ouster of strongmen in Tunisia and Egypt, it became obvious as geography that Libya would be next.
All this turmoil puts Canada and our oil industry in an enviable position with the United States. It's not well known in the U.S., but Canada is by far its largest supplier of oil and gas. The Saudis are second in terms of supply at 1.6 million barrels a day, and the Mexicans are third at 1.3 million barrels. But Canada is first at 2.4 million barrels a day.
And in terms of proven reserves, Canada is second only to Saudi Arabia, with 175 billion barrels.
In terms of current output, about 55 per cent of Canadian production comes from the oilsands, with 1.3 million barrels per day, scheduled to rise to 2.2 million barrels by 2015, according to Bruce Carson, director of the Canada School of Energy and the Environment in Calgary.
The Americans might want to end their dependency on foreign oil, but they don't consider Canadian oil foreign. And they have security of supply built into our trade agreements. Seldom has Washington been more receptive to the Canadian case that we are a reliable partner, and a stable democracy, with a north-south flow of oil that will never be interrupted.
It's also a propitious moment to be making the case for the Canadian oilsands with legislators and media, such as the New York Times, which still refer to the re-branded resource as the tarsands.
It might not be the cleanest oil in the world, although the industry is making significant improvements in terms of sustainability, especially in terms of GHG emissions, water usage and wildlife. Images of ducks in tailing ponds are not helpful.
Nevertheless, Canada is responsible for 1.9 per cent of the world's GHG emissions, and the oilsands account for five per cent of that. As our former ambassador to the U.S., Derek Burney, has pointed out, the coal-fired energy industry in the U.S. has a carbon footprint 64 times larger than the Canadian oilsands.
Something else that's not well known - Fort McMurray has the lowest sulphur dioxide levels in Canada, one third that of Toronto, and less than half of Montreal's. For the latest updates PRESS CTR + D or visit Stock Market news Today
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