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Energy

Biden chose Venezuela over Canada for oil

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6 minute read

From the MacDonald Laurier Institute

By Brian Lee Crowley

Biden is welcoming oil from one of Latin America’s most odious regimes. It’s a big win for Nicolás Maduro, but a bad deal for America and Canada

The United States needs more heavy oil for a whole series of reasons. President Joe Biden could have chosen to have that oil come from a close friend and ally, environmentally-conscious Canada, or from one of the world’s nastiest regimes, Nicolas Maduro’s Venezuela, which doesn’t give a toss about the environment. Which did he choose?

Venezuela, of course.

In exchange for modest concessions on electoral reform, the Biden administration just lifted sanctions on Venezuela, allowing them to export hundreds of thousands of barrels a day of vital heavy oil to the United States. The shale oil revolution has not and cannot change the fact that the US produces virtually no heavy oil, yet many of this country’s refineries, especially on the Gulf Coast, were set up to refine that kind of oil. Most of their heavy oil is from Canada, which is why that country is far and away the largest exporter of oil to America— more than twice as much as Saudi Arabia, Mexico, Russia, and Colombia combined. If America is now a net exporter of oil, it can thank Canada.

The war in Ukraine caused unpopular price hikes at the gas pump. In response, the Biden administration has drawn down the Strategic Petroleum Reserve (SPR). That drawdown focused on medium and heavy crudes. OPEC responded with supply cuts aimed at throttling the supply of these strategically important crudes.

The drawdown of the SPR is reaching its limits but the risk of higher gas prices in an election year is rising. To OPEC and Ukraine, we must now add the heightened risk of conflict spreading in the Middle East.

In this context, recall that one of the very first acts President Biden took on reaching office was to cancel the permit for the Keystone XL (KXL) pipeline, a permit issued by his predecessor. Keystone XL was intended to provide 830,000 barrels a day of Canadian heavy crude to those Gulf Coast refineries. Pipe was already being laid.

Had President Biden allowed KXL to proceed, the supply of heavy oil to the US industry would have been secure, risky drawdowns of the SPR unnecessary and America would have been much less vulnerable to global supply disruptions and OPEC’s manipulations.

Instead, the President colluded with a campaign to vilify oil from Alberta’s oilsands as “dirty oil.” Yes, producing Canada’s heavy oil emits greenhouse gases. But then all heavy oil is GHG intensive, and Venezuela is the highest emitting in the world.

The Canadian oil & gas sector has invested heavily and successfully in emissions reductions. The industry has a $75 billion plan to decarbonize and achieve net zero by 2050, focused on carbon capture and storage and small modular nuclear reactors.

Venezuela has done nada in terms of real improvement in the environmental footprint of its heavy oil production. What it does have is a regime that is world-leading in terms of its human rights abuses and the damage it has inflicted on a once-prosperous economy. Every dollar America spends on Venezuelan oil will prop up one of the most violent and repressive regimes in the Americas, where Amnesty International says in 2022:

The security forces responded with excessive force and other repressive measures to protests…to demand economic and social rights, including the right to water. Impunity for ongoing extrajudicial executions by the security forces persisted. Intelligence services and other security forces, with the acquiescence of the judicial system, continued to arbitrarily detain, torture, and otherwise ill-treat those perceived to be opponents of the government of Nicolás Maduro.

A recent UN Fact Finding Mission to Venezuela talked about the “unremitting human rights crisis” and patterns of crimes against humanity in that country. Nearly 8 million Venezuelans are estimated to have fled the economic and humanitarian crisis there.

Meanwhile, Canada, while not perfect, has robust human rights protections and high environmental standards. It is also a magnet for immigrants (including tens of thousands of Venezuelans), having one of the highest shares of its population born elsewhere in any country in the world.

In 2021 President Biden was happy to offend one of America’s closest allies by blocking KXL because it was inconsistent “with my administration’s economic and climate imperatives.”  Three short years later, behind the fig leaf of Venezuelan electoral reform, he is welcoming much more environmentally damaging oil from one of Latin America’s most odious regimes, all to try and keep the price down at the pump. That’s a big win for Nicolás Maduro, but a bad deal for America and Canada.

Brian Lee Crowley is the Managing Director of the Center for North American Prosperity and Security (www.cnaps.org).

Business

Premiers fight to lower gas taxes as Trudeau hikes pump costs

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From the Canadian Taxpayers Federation

By Jay Goldberg 

Thirty-nine hundred dollars – that’s how much the typical two-car Ontario family is spending on gas taxes at the pump this year.

You read that right. That’s not the overall fuel bill. That’s just taxes.

Prime Minister Justin Trudeau keeps increasing your gas bill, while Premier Doug Ford is lowering it.

Ford’s latest gas tax cut extension is music to taxpayers’ ears. Ford’s 6.4 cent per litre gas tax cut, temporarily introduced in July 2022, is here to stay until at least next June.

Because of the cut, a two-car family has saved more than $1,000 so far. And that’s welcome news for Ontario taxpayers, because Trudeau is planning yet another carbon tax hike next April.

Trudeau has raised the overall tax burden at the pumps every April for the past five years. Next spring, he plans to raise gas taxes by another three cents per litre, bringing the overall gas tax burden for Ontarians to almost 60 cents per litre.

While Trudeau keeps hiking costs for taxpayers at the pumps, premiers of all stripes have been stepping up to the plate to blunt the impact of his punitive carbon tax.

Obviously, Ford has stepped up to the plate and has lowered gas taxes. But he’s not alone.

In Manitoba, NDP Premier Wab Kinew fully suspended the province’s 14 cent per litre gas tax for a year. And in Newfoundland, Liberal Premier Andrew Furey cut the gas tax by 8.05 cents per litre for nearly two-and-a-half years.

It’s a tale of two approaches: the Trudeau government keeps making life more expensive at the pumps, while premiers of all stripes are fighting to get costs down.

Families still have to get to work, get the kids to school and make it to hockey practice. And they can’t afford increasingly high gas taxes. Common sense premiers seem to get it, while Ottawa has its head in the clouds.

When Ford announced his gas tax cut extension, he took aim at the Liberal carbon tax mandated by the Trudeau government in Ottawa.

Ford noted the carbon tax is set to rise to 20.9 cents per litre next April, “bumping up the cost of everything once again and it’s absolutely ridiculous.”

“Our government will always fight against it,” Ford said.

But there’s some good news for taxpayers: reprieve may be on the horizon.

Federal Conservative leader Pierre Poilievre’s promises to axe the carbon tax as soon as he takes office.

With a federal election scheduled for next fall, the federal carbon tax’s days may very well be numbered.

Scrapping the carbon tax would make a huge difference in the lives of everyday Canadians.

Right now, the carbon tax costs 17.6 cents per litre. For a family filling up two cars once a week, that’s nearly $24 a week in carbon taxes at the pump.

Scrapping the carbon tax could save families more than $1,200 a year at the pumps. Plus, there would be savings on the cost of home heating, food, and virtually everything else.

While the Trudeau government likes to argue that the carbon tax rebates make up for all these additional costs, the Parliamentary Budget Officer says it’s not so.

The PBO has shown that the typical Ontario family will lose nearly $400 this year due to the carbon tax, even after the rebates.

That’s why premiers like Ford, Kinew and Furey have stepped up to the plate.

Canadians pay far too much at the pumps in taxes. While Trudeau hikes the carbon tax year after year, provincial leaders like Ford are keeping costs down and delivering meaningful relief for struggling families.

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Economy

Gas prices plummet in BC thanks to TMX pipeline expansion

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From Resource Works

By more than doubling capacity and cutting down the costs, the benefits of the TMX expansion are keeping more money in consumer pockets. 

Just months after the Trans Mountain Expansion (TMX) project was completed last year, Canadians, especially British Columbians, are experiencing the benefits promised by this once-maligned but invaluable piece of infrastructure. As prices fall when people gas up their cars, the effects are evident for all to see.

This drop in gasoline prices is a welcome new reality for consumers across B.C. and a long-overdue relief given the painful inflation of the past few years.

TMX has helped broaden Canadian oil’s access to world markets like never before, improve supply chains, and boost regional fuel supplies—all of which are helping keep money in the pockets of the middle class.

When TMX was approaching the finish line after the new year, it was praised for promising to ease long-standing capacity issues and help eliminate less efficient, pricier methods of shipping oil. By mid-May, TMX was completed and in full swing, with early data suggesting that gas prices in Vancouver were slackening compared to other cities in Canada.

Kent Fellows, an assistant professor of Economics and the Director of Graduate Programs for the School of Public Policy at the University of Calgary, noted that wholesale prices in Vancouver fell by roughly 28 cents per litre compared to the typically lower prices in Edmonton, thanks to the expanded capacity of TMX. Consequently, the actual price at the gas pump in the Lower Mainland fell too, providing relief to a part of Canada that traditionally suffers from high fuel costs.

In large part due to limited pipeline capacity, Vancouver’s gas prices have been higher than the rest of the country. From at least 2008 to this year, TMX’s capacity was unable to accommodate demand, leading to the generational issue of “apportionment,” which meant rationing pipeline space to manage excess demand.

Under the apportionment regime, customers received less fuel than they requested, which increased costs. With the expansion of TMX now complete, the pipeline’s capacity has more than doubled from 350,000 barrels per day to 890,000, effectively neutralizing the apportionment problem for now.

Since May, TMX has operated at 80 percent capacity, with no apportionment affecting customers or consumers.

Before the TMX expansion was completed, a litre of gas in Vancouver cost 45 cents more than a litre in Edmonton. By August, it was just 17 cents—a remarkable drop that underscores why it’s crucial to expand B.C.’s capacity to move energy sources like oil without the need for costly alternatives, allowing consumers to enjoy savings at the pump.

More than doubling TMX’s capacity has rapidly reshaped B.C.’s energy landscape. Despite tensions in the Middle East, per-litre gas prices in Vancouver have fallen from about $2.30 per litre to $1.54 this month. Even when there was a slight disruption in October, the price only rose to about $1.80, far below its earlier peaks.

As Kent Fellows noted, the only real change during this entire timeline has been the completion of the TMX expansion, and the benefits extend far beyond the province’s shores.

With TMX moving over 500,000 barrels more per day than it did previously, Canadian oil is now far more plentiful on the international market. Tankers routinely depart Burrard Inlet loaded with oil bound for destinations in South Korea and Japan.

In this uncertain world, where oil markets remain volatile, TMX serves as a stabilizing force for both Canada and the world. People in B.C. can rest easier with TMX acting as a barrier against sharp shifts in supply and demand.

For critics who argue that the $31 billion invested in the project is short-sighted, the benefits for everyday people are becoming increasingly evident in a province where families have endured high gas prices for years.

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