OTTAWA - "It is a matter of urgent national interest that we move our oil to tidewater because our only customer, the U.S., has found vast amounts of shale oil and gas and will need us less and less. If we do not access new markets, our resources will be stranded and a huge opportunity will be lost." — Finance Minister Joe Oliver.
The Conservative government has been making the case for years that Canada needs to diversify its energy market in order to reduce the country's overwhelming dependence on oil and gas exports to United States, which depresses the market price of Canadian crude.
At the same time, the government has been a loud advocate for the proposed Keystone XL pipeline that would carry Alberta oilsands bitumen to U.S. Gulf Coast refineries.
"If I were an American, I would be saying the last thing I would want to see is Canada sell its oil anywhere else," Harper told the Canadian American Business Council in New York in September 2013.
Finance Minister Joe Oliver recently introduced a new argument to the debate, telling a Calgary audience last week that declining U.S. demand for Canadian oil presents yet another reason to ensure Canada has the infrastructure — specifically pipelines — to get its oil to new foreign markets.
Has the U.S. shale oil revolution led to declining U.S. demand for Canadian oil?
Spoiler alert: The Canadian Press Baloney Meter is a dispassionate examination of political statements culminating in a ranking of accuracy on a scale of "no baloney'' to "full of baloney'' (complete methodology below).
This one earns a rating of "a lot of baloney." Here's why:
There is no question the shale oil boom has reduced American dependence on foreign oil.
After peaking at almost 14.7 million barrels per day in August 2006, American oil and petroleum imports from all foreign sources began a long decline that left the country importing less than nine million barrels per day by the end of 2014.
Canadian crude oil exports to the U.S. have also continued to rise, even as overall American energy imports fall.
In the first quarter of 2009, Canada shipped 1.75 million barrels of oil south each day, according to the National Energy Board.
By the first week of October 2014, Canadian oil exports to the United States had topped three million barrels per day for the first time ever.
The finance minister's office points to U.S. Energy Information Administration data to back Oliver's assertion the country will need Canada's oil "less and less."
The U.S. data shows a sharp and steady climb to 3.2 million barrels of imported Canadian oil per day in 2014, projected to rise to 3.4 million barrels per day this year.
After 2015, U.S. imports of Canadian crude are projected to flatten to as low as 3.28 million barrels per day in 2020 — but still above 2014 levels — then rise gradually to four million barrels per day by 2040.
The same U.S. report, "Annual Energy Outlook 2014," explains the seeming contradiction of declining foreign oil yet rising Canadian imports this way: "With total crude oil imports declining in the Reference case, imports of light crude oil are reduced, resulting in a heavier slate of imported crude oil. The growing share of heavier crude oil imports continues through 2025 before stabilizing."
The report also points to increasing future demand for diesel fuel, which "increases the value of heavier crudes in U.S. refineries."
Heavy oil accounts for 43 per cent of Canadian production and 65 per cent of exports, according to the Canadian Association of Petroleum Producers.
WHAT THE EXPERTS SAY
"If you look at the U.S. government's own forecasts from the U.S. Energy Information Administration, they have a small decrease in total U.S. imports from 2012 through to 2040. And from today to 2040 they have a (very) slight increase," says Andrew Leach, the Enbridge professor of energy policy at the University of Alberta.
"But within that they also have increasing Canadian imports."
"So what you have is the U.S. still a significant importer of crude — five million barrels a day and increasing a bit — and a larger share of that volume being supplied, according to their forecasts, through Canadian imports."
Leach, however, cautioned against confusing U.S. demand with dependency.
Canadian crude, by virtue of its price and proximity, is the preferred U.S. option — not the only option. It's a question of need versus want.
"That's really the crux of a lot of this," said Leach.
Tim McMillan, president of the Canadian Association of Petroleum Producers, said in an interview that the big growth in energy demand will come from the Association of Southeast Asian Nations "and our industry, we believe, needs to have access to where our customers are."
McMillan said both Canada and the U.S. have improved production and he didn't take issue with Oliver's characterization of falling American demand.
"I think his comments are fair."
Bill Day, the director of corporate communications for refinery giant Valero Energy Corp., said most of the heavy sour crude being refined by the company's refineries on the Gulf Coast comes from Mexico, South America and Russia, but increasing amounts are coming from Canada.
Day said there is a specific need for heavy sour crude because, for those able to refine it, it is typically significantly cheaper than the benchmark grades of crude oil.
"So there will always be demand for heavy crude, regardless of what's happening with shale production here in the U.S. Where that heavy crude is supplied from remains to be seen," he said in an interview from San Antonio, Tex.
"We would rather it come from Canada because it's closer, it's less expensive to transport it, it's more reliable, a better trading partner and so forth."
Not only does Oliver's claim that the United States will need less Canadian oil not match American forecasts, it also flies in the face of the Conservative government's consistent messaging.
"No, no, no, Jesus, no, Joe," responded one Canadian involved in the pro-KXL campaign, who asked not to be named due to the sensitivity of the issue. "They need our oil specifically."
A day before Oliver's speech in Calgary, Natural Resources Minister Greg Rickford was in Freeport, Tex., where he issued a press release heralding Canadian oil exports to the U.S.
"Our government welcomes today's latest milestone contributing to already historic volumes of Canadian energy being supplied to the United States," stated Rickford.
"Indeed, both Canada and the United States have dramatically reduced oil imports from offshore, while our oil imports from each other are at record highs."
An accompanying news release stated that new U.S. pipelines will help boost Canadian oil reaching the Gulf Coast to 600,000 barrels per day from the current 200,000 barrels.
For these reasons, Oliver's statement contains "a lot of baloney.''
The Baloney Meter is a project of The Canadian Press that examines the level of accuracy in statements made by politicians. Each claim is researched and assigned a rating based on the following scale:
No baloney — the statement is completely accurate
A little baloney — the statement is mostly accurate but more information is required.
Some baloney — the statement is partly accurate but important details are missing.
A lot of baloney — the statement is mostly inaccurate but contains elements of truth.
Full of baloney — the statement is completely inaccurate
National Energy Board Estimated Canadian Crude Oil Exports by Type and Destination https://www.neb-one.gc.ca/nrg/sttstc/crdlndptrlmprdct/stt/stmtdcndncrdlxprttpdstn-eng.html
U.S. Energy Information Administration, imported liquids by source: