NAFTA: How America Controls Canada’s Oil

Header: Toronto Star

In the first hundred days of his presidency, Donald Trump has given media and talk show TV stars two separate opportunities to talk about Canada. First, there was the time when the Prime Minister Justin Trudeau went down to the White House to introduce himself to the newly appointed Commander-in-Chief. This handshake, for some reason made international headlines. Look at Trudeau’s glaring confidence. On this same occasion, the look that the Prime Minister gave—ever so handsomely—has become synonymous with how all Canadians probably would feel just before they would have to shake the President’s hand.

Donald Trump Hosts Canadian PM Justin Trudeau At The White House

Second, the President more recently made it very clear that high-quality, relatively cheap Canadian dairy and lumber products are harming American producers. Reportedly Trump said that “Canadian supply management is putting U.S. dairy farmers out of business.”

These comments and a few others that he made during the campaign trail have raised the controversial, but no-doubt beneficial North American Free Trade Agreement (NAFTA) from the grave and back into the limelight for public debate once again — even if for just a quick moment. The ugly stipulations and subsequent ramifications of this agreement are being discussed everywhere and that’s great—even if only over the topic of dairy and lumber.

Canada’s supply management, as the President so eloquently put it, is not the real problem here. If anything, the President has highlighted Canada’s ability to price its own goods on the market — well enough to keep up with changing times. While keeping Canadian producers paying reasonably fair, livable wages.

In contrast, he accentuated America’s inability to manage its own imports and exports effectively in a very competitive and desperate market. While  competing with Canada, the US is not being able to keep their own producers paying a fair, livable wage. With the President’s smirk remark at a steel mill, the spotlight has been put on the innocent dairy and lumber workers — but a much bigger and important question appears instead: Is NAFTA really providing the jobs to North Americans like it’s supposed to be?

I already wrote a portion of this post a few months ago when I finished reading a great book and its been floating around in my drafts, with no good use: until now. It finally relates with what’s going on and I’d like to bring up the topic of NAFTA, but not over dairy or lumber. I want to discuss NAFTA in relation to the most important traded commodity between Canada and the United States: Oil.

According to National Resources Canada (NRC,) Canada has the third largest oil reserves in the world, only behind Saudi Arabia and Venezuela, and is the world’s fifth largest oil producer. Almost half of all the crude oil the United States imports comes from Canada.

In 2014, 97% of Canadian crude oil exports went to the U.S. and 3% went to Europe and Asia.
As a result, Canada was the largest foreign supplier of crude oil to the U.S., accounting for 39% of total U.S. crude oil imports and for 18% of U.S. refinery crude oil intake.
NRC website

Almost all, nearly 97% of Canada’s crude oil exports goes to the US. The province of Alberta produces 79.2% of Canada’s oil. That’s such a substantial amount of the country’s market, no other province even comes close to Alberta.

The vast majority (97%) of Canadian oil production occurs in three provinces: Alberta, Saskatchewan, and Newfoundland and Labrador. In 2015 Alberta produced 79.2% of Canada’s oil, Saskatchewan 13.5%, and the province of Newfoundland and Labrador 4.4%. British Columbia and Manitoba produced about 1% apiece.
National Energy Board

There are two major cities in Alberta, both have a metropolitan area population of just above a million. Edmonton is the provincial capital and is the “northern gateway” that physically supplies the oil fields. It has many pipelines running straight to it from the active drill sites, where crude oil is upgraded into different kinds of products for sale. Calgary is the province’s largest city and is the financial hub that houses many of the headquarters for most of the industry’s multinational corporations that operate in the country. Companies like: BP Canada, CNRL, Cenovus, Enbridge, Husky, Imperial Oil, Nexen, Petro Canada and Suncor—basically every oil company operating in Canada—are all headquartered there.

The typical urban dwellers are so far away from the isolated Athabascan oil sands—about 400 km north of downtown Edmonton (~200 mi)—that they don’t have any idea what’s actually going on up there. The notorious oil sands are globally recognized, however most people who work in Alberta aren’t working directly for an oil corporation, but rather they work for a company which exists only to service the oil industry and to allow it prosper.

They may be in the same province, but Alberta really is huge. Most city folk, like everywhere else in the world, work at a service industry level job—an industry which entirely relies on the constant extraction of the non-renewable resources that’s underneath the whole province. It’s a very diverse market. So what do people do? Well they loyally, but blindly, pay their local, provincial and federal taxes—which keep the government’s naïve ecologically destructive policies in play, as they keep the economic market in Alberta healthy and competitive on a global scale. Not only the direct destruction of the ecosystem that’s seen, that’s involved in oil sand mining, but also the effects on the groundwater surrounding runoff ponds, pipelines and the facilities themselves. The amount of fresh water that’s needed to produce a single barrel of oil is staggering and the government does willy-nilly hand it over to corporations to produce energy.

There is a crucial relationship here between non-educated citizens allowing this to happen day-to-day and the secretive institutions  of the oil industry that keep this obviously defunct global system (the economy) running, and that’s only truly obvious if you take the time to read some of those ridiculously written policies. One can just go outside or look on Google Earth to see what kind of effect that the energy production is having on the environment. No one can convince me that smog, or kilometer wide pits in the Boreal Forest is a good thing for the planet. A regular passerby cannot see facilities from the road, the sheer size of them make it impossible to get a full view. Also, the leftover trees that haven’t been torn make a visual barrier for the public, obstructing normality and blocking any kind of consent. Most of Alberta’s reserves can be easily pumped out of the ground. This is a much more conventional way to do it.

Map: Steven Fick/Canadian Geographic; Source: Alberta Department of Energy

Conventional stretches populations to the most remote parts of the province. Even then, the locations of most of these sites blend in so well, that people usually don’t even know they are there. Hidden in the north where almost nobody lives, hides an infinite amount of pump jacks and larger drill sites that are always working—24/7. In Canada, it is nothing like it is in US—especially Los Angeles, where I have already written about drill sites that are deliberately hidden in plain sight. There, the oil reserves are located right underneath the city. In Canada, nothing is hidden from anybody, everything is right there but conveniently located in the most isolated places available. I have also written about how extreme the air pollution is getting in Alberta—almost worst than it is Los Angeles actually, and all this is being directly generated by the oil production.

I used to live very close to Cold Lake and the company that I worked for at that time delivered supplies—like gloves and cleaning supplies—to oil companies operating in the oilfields in the north. I was a delivery boy then. I made a trip up there (the oil fields in the screenshot above) at least once a day. There are no private or restricted roads, but when you’re in the middle of no where, there doesn’t have to be. It was always a trip going to these lonesome work sites. At times I was completely alone—so far way from any kind of civilization that I felt on edge the whole time I was there.

In some places though, like around Fort McMurray and Fort Mackay, the oil is a completely different consistency and instead of just being drilled out of the ground—the oil-soaked sand has to first be dug out of the ground and then separated manually (in many steps) to get a final product in liquid form that can be easily transported to customers. This process is the very big, dirty and therefore easily seen part of the oil industry.

Even though the actual location of the oil sands is by far the most publicly known, compared to the conventional drilling sites around Cold Lake and Grande Prairie for example—which individually are much higher in numbers but are less known—nevertheless the sands are only a tiny pocket of quarries inside a vast oilfield which is very, very far from the Starbucks addicted metropolitan populations working for security companies, industrial suppliers, auto dealerships, insurance firms, registry and financial offices, etc. The fact of the matter is that our entire globalised machine (our whole global civilization) runs on oil right now.

Everything is totally dependent on the North American system running smoothly, first. But primarily the US. If something were to happen to their oil reserves, that could mean anarchy. The whole machine depends on Uncle Sam staying strong and presenting dominance in order to keep all the other countries in line, or at least that’s the story we’re all being told. That’s a good thing too. Plausibly, the world’s never been better since the US has been in charge. But that’s a whole other story. People that live in Alberta should know and be proud that their precious oil reserves keep the American economy running smoothly, which in turn keeps the whole world’s economic system running. If think about it, energy extraction in Alberta is what makes a global economy possible. Almost half of America’s oil comes from Alberta and that’s something to celebrate. The long-lasting political stability in Canada has undoubtedly granted the US a never-ending supply of oil.

Albertans may try to say that they play their role in their economy (their oil sands) and they do, sort-of. This is where it starts to get really complicated. The government of Alberta and Canada does own the land that the very valuable resources are located on. Period. Unfortunately for the regular hard-working citizens—none of that means a damn thing in a free market economy. In a free market, it’s all about who’s in control. It does not matter where the product is coming from.

The author William Marsden describes in his book Stupid to the Last Drop how the Premiers of Alberta, Lougheed and Klein (1971-85 and 92-2006) and Prime Minister of Canada, Mulroney (1984-93) invented NAFTA in full collaboration (intimidation) with (from) the Americans. I’m obviously simplifying his entire argument, but those two gentlemen did initiate the free trade deals which are still in place today. Their NAFTA evolved from the National Energy Program (NEP) which was created and enacted by Trudeau Sr. in the 80s—his son Justin Trudeau became the Prime Minister in 2015.

Marsden explains in his book how Lougheed and Mulroney simply signed off Canada’s rights to all its profitable minerals that it has within its own borders. What I am trying to say here is that Canadian nationalism itself, was at the mercy to American idealism—when it came to NAFTA—and our elected representatives signed off nationalism to give them their idealism. If Canadian workers are inherently less important than the American powerhouse, then what does that mean for the Canadians living in Canada? Is NAFTA designed only to benefit the US—a contract to keep American benefits coming indefinitely? Is that kind of manipulation capitalism?

When Canada agreed to NAFTA, we agreed also to Article 605. (The actual text of Article 605 is here: Global Affairs Canada.) The article is symbolic because when it was signed, Canada agreed without any doubt that American Policy is more important than Canadian Policy. Americans will always be able to survive even if that means the sacrifice of every single grain of resource and mineral that Canada has. Every single Canadian job will be lost first, as long as Americans aren’t losing out in the end. That’s the article in a nutshell.

This really concerns me because I’m a Canadian nationalist, or at least I try to be. I’m proud that I’m a Canadian that works here for a Canadian company and I’m paying Albertan and Canadian taxes. I’m mostly concerned about other Canadians first before I am with anyone else around the world… Why then, would I want my Canadian manufactured goods and products (oil, byproducts and plastics) to be more expensive for me over time?

Is this a denial of my own nation’s rights, to not be in control of what is ours? For us to own something (like oil) but to know that there is only a monopoly to sell it to: the United States. There are apparent “repercussions” for Canada to trade its oil with any other country while the agreement is in effect, because that would make the Americans feel like their resources are at immediate risk of being sold to another country and not them. That’s how paranoid this article is! It stipulates that they own Canada’s resources so they can survive.

Article 605 is a matter of American national security. If Canada traded its oil elsewhere, that would leave the Americans with potentially no oil to warm their homes, fuel their vehicles, run their technology, keep their food cool and etc. To them without Canada’s resources, nothing would be left. This reality frightens American policy makers. If they lose Canada they have to find somewhere else to get all that oil and energy from.

Americans know they’re the Alpha Male in the global group of countries, but as powerful as America may seem to be, they rely absolutely on countries like Canada, which is Americas best trading partner. Without Canada’s precious exports, the American machine would just cease to exist. It would stop running. That’s why the American military is so huge. Not because they’re fighting with Canadians but because they have to keep an arms hegemony so these big contracts can keep working so they can keep force. The US needs to be able to bully other countries into tricky deals like NAFTA to keep trading with them. They depend on countries like Canada to surrender.

These quotes are from Marsden’s book:

Alberta under Ralph Klein [a former Premier], Lougheed says, essentially surrendered its control over its own resources to the free market, and the Americans have walked in and taken control — partially because of the free trade deal that Lougheed himself helped negotiate. Yet one vital fact is still undeniable: Albertans own the resource.
Article 605 says that Canada, in the event it decides to reduce its production for any reasons of, for example, environmental protection, conservation or national security, must maintain the exact percentage of exports to the United States that prevailed over the previous three years.
So if over the last three years Canada exported 60% of its gas and oil production to the United States — as is the present situation — it must continue to export that percentage even if this means that Canadians will not have enough for their domestic needs.
Under Article 605, Canada can’t even tax its oil and gas exports if it means Americans would have to pay more for their Canadian fuel — and petrochemicals — than Canadians.
Stupid to the Last Drop: How Alberta is bringing environmental Armageddon to Canada (and doesn’t seem to care)

The moral of Marsden’s story here is that the US does control what Canada has and subsequently with NAFTA, what the province of Alberta has. Everything. All of the profitable resources is controlled. If Americans don’t essentially control the whole Canadian economy with NAFTA, then at least the whole petrochemical industry that’s in Alberta and all the other service industries that come along with the current economic policy that has its highest priority on resource production. Marsden also mentions in the book that only Canada and the US have agreed to Article 605—Mexico has not agreed to it. Yet Mexico still is able to be an active member of NAFTA, and still, reaps its own “benefits” just the same as Canadians do.

Article 605 is uniquely special and establishes an American exceptionalist-style rule on the Canadian economy. I mean, it’s obvious. All that we do, all the time: Is work to keep producing oil for the American machine. How long will our capitalist economy demand us to keep constantly working at the highest capacity possible? Are we stuck with constantly straining just to come out with better numbers, better quotas, better profits?

Can NAFTA be changed without being completely thrown out? By now President Trump must understand how complex and important NAFTA is for Canada and Mexico. Us peripherals need trade agreements to ensure we have a market for the goods we are selling. We need that economic security NAFTA provides us so that we can keep on developing and the US, in-turn needs a stable supply of resources to keep them doing what they’re doing. The US needs NAFTA too.

What should be most important is having a better society overall, but agreements like NAFTA and TPP (thankfully that’s in the past now) keep the average working class citizens constantly at work and constantly stressed out for something called “free trade.” Canada is unable to help (by trading with) developing countries because we’re stuck sending 97% of precious oil to the US, and we’re stuck sending 3% more than we did last year because of tricky articles like 605. Canada’s economy is intertwined with the US’s. Mexico on the other hand is probably where the debate should be more focused.

Mexicans deserve a higher standard of living than they have now and I think a big part of that starts with the better trade agreements they have with their closest neighbors. Workers are kept without purpose in this capitalist world. They’re unable to keep up with the madness of international trade. As a loud-mouthed reality star, disguised as a strong demagogue only begins to criticize other countries and leaders that he knows nothing about—let us start to redefine what is important to us as Canadians first.


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