The Foreign Service Journal, December 2003

levels in the early 1950s. Our oil con- sumption was significantly outrunning the use of coal. And Saudi Arabia’s oil production was growing at double-digit rates. It has now been 30 years — a long generation — since the 1973 Yom Kippur War triggered the Arab coun- tries’ oil embargo against the United States. Those events launched Ameri- cans into decades of angst about our reliance on imported energy, the inter- national politics of oil, and the border- less reach of multinational oil companies. Where energy is concerned, Americans have learned to think in terms of security, rather than self-sufficiency. But when we seek energy security, do we know where in the world our best partners are? In its April issue focusing on Central Asia, the Journal published an article by Alec Rasizade (“Caspian Basin Oil: Just a Pipe Dream?”) that made a sensible point: Caspian energy developments have more meaning from a political point of view than from the perspective of U.S. energy security. As a sidebar, the article included a list from the Sept. 14, 2002, issue of The Economist magazine labeled “The World’s Largest Crude Oil Producers in 2001.” (The coun- tries were actually ranked by reserves, not production, despite the heading.) The table listed five Persian Gulf states, followed by Venezuela, Russia, the United States, Libya and Mexico, in that order. Canada did not show up anywhere on this list, even though it produced more petroleum in 2001 than Iraq, Kuwait and the United Arab Emirates (all of which were included) and has the second largest petroleum reserves in the world after Saudi Arabia (which should have placed it second on the list). In fact, Canada is, by a ratio of greater than two to one, the largest exporter of total energy to the United States — see the tables on p. 44. And it warmly and consistently supports America’s national energy goals. Canada’s role as a net energy supplier to the United States traces back to the 1920s in the electric power indus- try. But it wasn’t until after WorldWar II that major oil and gas fields were developed in Western Canada. Fortunately for American consumers, Canada had an excellent investment climate for natural resource industries, easy accessibility to U.S. firms, and advanced technical capaci- ties. As a result, its oil production ramped up smoothly and quickly to world-class levels. The Quiet Giant Next Door And in 1972, the year before the imposition of the oil embargo, Canada became our single largest foreign supplier of petroleum, shipping us over a million barrels a day — nearly a quarter of our import needs — in addition to exporting more than one trillion cubic feet of gas and 11 billion kilowatt-hours of power per year to the U.S. Three decades later, Canada is still our largest supplier of imported crude and refined petroleum products, exporting an estimated 1.58 million barrels per day of crude oil to the United States during 2002 — a new record, up 4 percent over 2001. Moreover, Canada’s oil reserves are actually growing, partly because American companies have helped pioneer massive exploration. Its proven conventional reserves grew by about 3.1 percent in 2001, faster than North American demand rose. Yet conventional oil is only part of the story — and a much smaller part than it was in 1973. For one thing, oil statistics ignore the expanding role of Canadian natural gas in America’s economy. In 1973, nat- ural gas imports from Canada supplied about four percent of U.S. gas consumption. Over the next two decades, that figure doubled to around 8 percent. Then, in less than 10 years, it doubled again: thanks to ambitious investments in our shared cross-border pipeline network, Canada now supplies about 16 percent of America’s natural gas. Another problem with conventional oil data is that they often leave out frontier resources like Newfoundland’s off- shore oilfields, which began producing in the late 1990s. Under Newfoundland’s continental shelf lie an estimated six to 12 billion barrels of recoverable oil (between two and three billion barrels of which have already been discov- ered) and 50 to 60 trillion cubic feet of natural gas (10 tril- lion feet discovered). But the real flaw in using conventional oil data to view F O C U S D E C E M B E R 2 0 0 3 / F O R E I G N S E R V I C E J O U R N A L 41 Where energy is concerned, Americans have learned to think in terms of security, rather than self- sufficiency. John Stewart is an economic specialist at the United States Embassy in Ottawa. The views expressed here are those of the writer.