OTTAWA — Canada’s energy minister will speak to his U.S. and Mexican counterparts Thursday in a bid to form a common front ahead of talks aimed at ending the global oil-price wars.
But Deputy Prime Minister Chrystia Freeland refused Wednesday to say whether Canada would consider slapping import duties on oil from Saudi Arabia or Russia if they don’t agree to curb production to respond to the drastic drop in demand for oil.
U.S. President Donald Trump is threatening such tariffs from his end and Alberta Premier Jason Kenney said last week he “would like to pursue concepts like an import tariff on foreign oil that’s been dumped into the North American market during the crash in demand.”
Kenney also wants a continental energy policy to help North America fight what he says are predatory pricing practices of the Organization of the Petroleum Exporting Countries, or OPEC.
“I’ve begun that discussion with American officials,” Kenney told the Alberta legislature April 1.
Natural Resources Minister Seamus O’Regan is set to talk with the energy secretaries in Washington and Mexico City by phone Thursday, a day before G20 energy ministers are to hold virtual talks about oil prices.
Freeland said working with the U.S. is a critical part of Canada’s energy plans, because the fossil-fuel sectors in both countries are so intertwined. Freeland however would not support or disavow the idea of tariffs, even as she said “the actions by Russia and Saudi Arabia have had unfortunate consequences on the global oil market.”
“I chose my words carefully,” Freeland said, when a reporter noted she didn’t answer the question about tariffs the first time.
“We are very focused on this issue. It’s an important issue for Canada and the world.”
While the United States was the origin of almost three-quarters of Canada’s oil imports in 2019, Statistics Canada trade data shows Saudi Arabia was No. 2, supplying 15 per cent of imports and Russia was third with three per cent. Canadian refineries brought in more than 37 million barrels of oil from Saudi Arabia, valued at more than $3 billion, and 6.5 million barrels from Russia, with a total value of almost $555 million.
Canada’s political relationship with each country is fraught with tension even on good days.
World oil prices plummeted in recent weeks, as COVID-19 grounded airplanes, moored cruise ships, closed manufacturing plants and led billions of people to work from home. But instead of agreeing to curb production, Saudi Arabia and Russia increased their supplies. The ensuing glut of oil pushed prices lower than they have been in almost two decades.
In Canada, where Western Canadian Select oil always trades for less than most other oil products, the price of a barrel of oil dipped lower than the price of an expensive latte or beer last week. It’s trading for about US$8 a barrel this week.
“The current situation is a real problem for Canada and we are working to find ways to resolve it,” said Freeland.
Canada’s oil and gas sectors together contribute about seven per cent of Canada’s economic activity, with more than 800,000 jobs. Alberta’s provincial budget for the year assumed the price of oil would be several times what it is now.
Saudi and Russian envoys were to have talked Monday about the situation, but that didn’t happen. The talks, being held remotely because of COVID-19, were rescheduled for Thursday.
This report by The Canadian Press was first published April 8, 2020.
The Canadian Press
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