When Prime Minister Justin Trudeau rolls out the red the carpet for US President Joe Biden today, there will be all the usual niceties: friendly handshakes and boiler plate statements on the enduring partnership between two countries that share the longest undefended border in the world. And smiles all around.The problem is the Canada-US relationship hasn’t been that friendly of late. Or even passively aggressive — compared to former President Donald Trump who infamously trashed Trudeau on Air Force One before he even left Canadian airspace. In many respects it has been downright hostile. Especially if you consider a de facto blockade of energy resources an act of war..Sure, JT will receive assurances to protect Ontario’s auto industry from the gratuitous excesses of Biden’s Inflation Reduction Act (IRA) with clean energy subsidies so egregious even the EU is outraged over what it sees as a looming trade war for green investment. And he might even get a deal to stem the flow of illegal immigrants the Biden administration is unceremoniously dumping in Quebec to appease his own critics back home..But the one thing Trudeau won’t bring up is the nagging question of why this country — indeed, this province — is subsidizing US oil refiners to the tune of $50 million per day as a result of his decision to cancel the KeystoneXL pipeline on his first day in office. .That’s because KXL would have ensured world prices for Alberta’s discounted barrels. As of Friday that was about $20 a barrel, for $47 compared to $68 for US benchmark West Texas Intermediate (WTI) and $75 for UK Brent. Doing some matchbook math, that works out to about $50 million dollars a day on three million barrels per day of exports. Or $350 million a week. Or $1.5 billion a month. In other words, we’re subsidizing US motorists and industry to the tune of $20 billion a year..This, even as Biden goes cap in hand to his buddies, the Saudis, and begs them to produce more oil — notwithstanding the 800,000 bpd that could be turned on with practically the stroke of his pen. That’s roughly the same amount he’s been releasing from the Strategic Petroleum Reserve every day. This, even though he approves drilling in an Alaska wildlife preserve that’s twice as far from the Lower 48 than Ft. McMurray. .Why would he do this to such a “trusted” partner. The economic impetus is clear. By land locking Canadian barrels and restricting them primarily to refineries in Ohio he gets to buy Canadian oil at a 25-30% discount and then exports his own at world price through the Gulf of Mexico. Nice work if you can get it..The US, which was (and still is) our largest customer is now our largest competitor. And it has the hammer to enforce patently noncompetitive terms..Why any government, much less the Trudeau Liberals, would tolerate such a situation is anybody’s guess. But it plays nicely into its own efforts to block pipelines to our own coasts and render the oil industry uneconomic while he pursues his own ‘Just(in) Transition.’.Any other leader would be outraged. Especially considering oil accounts for almost 85% of all Canada’s exports. Premier Danielle Smith summed it up nicely in a letter to the Prime Minister yesterday: “This economic reality, along with Russia’s invasion of Ukraine, has highlighted that North American energy security must be a top priority for the Government of Canada. I urge you to raise the need for better collaboration between Canada and the US to ensure the continued and enhanced supply of sustainable, affordable, and reliable energy to the US.”.She was being much too kind. I was surprised, and somewhat impressed, by her moderate and uncharacteristically reasonable tone..No, Justin won’t raise the question with Joe. But it raises an even more pressing — and obvious — query: With friends like Biden, who needs enemies?
