It’s becoming increasingly clear that Saudi outrage at the Trudeau government is little more than bluster and strut, so what is Saudi Arabia really trying to accomplish?
The overreaction is almost comical.
The Saudis invest so little in our country and buy so little from us, it’s been challenging to find examples of any businesses or industries that are going to be hurt. That’s why the universities are stepping up to complain about the loss of money from Saudi foreign medical students. I’d have more sympathy were it not for the stories that have been written about how Canadian-born students have to go abroad because they can’t get into Canadian medical schools or get residency positions.
How about we use this as an opportunity to serve our Canadian students first? Barring that, there is lots of demand from all over the world for students to come to Canada. How about we replace those Saudi students with students who come from a country where girls are allowed to show their faces in public and be friends with boys?
The only thing I thought that really could have pinched Eastern Canada was the Irving Refinery losing the 86,000 barrels of oil a day that it imports from Saudi Arabia. But, lo and behold, that’s not going to be affected. On Thursday, Saudi Energy Minister Khalid al-Fahlil said, “The current diplomatic crisis between Saudi Arabia and Canada will not, in any way, impact Saudi Aramco’s relations with its customers in Canada.”
Prime Minister Justin Trudeau should tell the Saudi regime that actually, it will affect that relationship. He should tell Saudi Aramco, “We don’t want your oil. We have enough of our own.”
The best way to interpret what is going on here comes from Auspice Capital Partners co-founder Tim Pickering. He thinks the Saudis are engaging in a game of distraction.
LISTEN: Danielle Smith speaks to Tim Pickering to learn more about our “need” for Saudi Arabia oil
It has not escaped the attention of the investment community that Saudi Aramco’s much-ballyhooed initial public offering of Saudi Aramco has not happened. Perhaps it’s because oil is not at the price level the company needs to get maximum market value, but US$70 a barrel is pretty healthy by recent standards.
Pickering thinks it has more to do with the fact that Saudi Arabia doesn’t have as much oil as it says it does. He says the former vice president of Saudi Aramco warned the U.S. that remaining oil reserves might be 40 per cent lower than what is claimed by OPEC. Venezuela, likewise, has recoverable reserves that are less than technically (not to mention politically) feasible to recover.
Meanwhile, Alberta’s technical capacity to recover our oilsands has increased from only 10 per cent recoverable to as much as 60 per cent recoverable due to advances with in situ recovery.
The upshot is that although it is reported that Canada has only the third largest reserves, the reality is that Alberta’s recoverable reserves are actually the largest on Earth — larger than Saudi Arabia and Venezuela combined.
The world is thirsty for oil. Daily annual consumption approaches 100 million barrels a day and it continues to rise as China, India and other countries continue to develop. If we get our product to international markets, we stand to be the most influential seller of oil in the world.
But it has to start by getting our act together at home.
The Irving refinery has rail capacity to offload 145,000 barrels a day of crude that can be shipped to them from Western Canada. The government should invoke the principle of national security to supply the Irving Refinery with Western Canadian crude and force out Saudi oil from our market completely. Then the government should contact TransCanada and ask what it would take to get the company to kickstart the construction of Energy East in the national interest.
Saudi Arabia isn’t attacking us because we are a small player. It is attacking us because we are a huge threat to its international market share.
Let’s not let this dispute go to waste. Now is the time to fight back.