Dictatorships supply half the world’s oil and natural gas: Canadian Energy Centre

The National Telegraph recently interviewed Dr. Milke of the Canadian Energy Centre on demand for Canada’s oil and gas, as a “free” energy producer.

Recent events, including the price war between Russia and OPEC, and the illegal Wet’suwet’en blockades have demonstrated outright hypocrisy from environmentalists, who remain selective on what constitutes an ethical product.

From China to Saudi Arabia, countries with a questionable affinity to protecting the environment and human rights, and who are classified as “not-free,” according to the Tyranny Index, remain impervious to such criticism.

China’s Uighur camps are the site of numerous crimes against humanity that include mass incarceration, ethnic cleansing, rape and incidences of anti-Muslim conversion.

For Saudi Arabia, its beheading of non-Sunni Muslims, war crimes in Yemen, and albatross treatment of sexual and religious minorities remain a concern, also.

Such nation-states contribute to facilitating 51 and 49 per cent of global oil and natural gas supply, respectively—a significant uptick from previous decades.

Though many in Canada have tackled economic reconciliation, championed greater pipeline capacity and recognized the errs of its opposition’s activism, amongst other factors, Dr. Milke articulates the problem with the ethics argument: it’s applied unfairly to Canadian producers and advocates, and here’s why:

TNT: In 2019, over half of global oil production came from nation-states that the CEC classified as non-free, which has gradually risen since the 1990s. Countries like China, Saudi Arabia, Iran and Russia, are amongst those nations that pose threats to Canada’s National Security and its domestic industries. What are some of the reasons for this uptick in oil and gas production from autocratic states?

Dr. Milke: In 1990, some nation-states, like the Soviet Union, were becoming freer by opening up their economies. The data we use on free, not free, partly free comes from the Freedom House, which has been measuring how free countries are, since the 1970s. And so, you see an uptick in oil and natural gas products produced from free or partly free countries relative to tyrannies and dictatorships and the like. And that has a lot to do with where countries themselves were headed after the Cold War. 

Another reason is, in some cases, the production of oil in free countries was increasing. Norway, for example, jumped from about half a million barrels a day in 1980 to over 3.3 million in 2000. So a higher proportion of countries were in the free column because of both changes in the rankings, how they were categorized and in some cases because of their production.

TNT: Countries like China and Saudi Arabia, they have various state-owned entities that have either purchased shares in oil and gas producers or the production rights to specific areas. Given the current issues with Saudi Arabia’s human rights abuses, as well as China’s infringement of Hong Kong and Taiwanese sovereignty, is this problematic, especially when consumers consider the moral implications of where we get our products from?

Dr. Milke: Well, it’s always a problem to talk about any product and its ethical guidelines for investing because one can hold valid concerns, while others go overboard. For example, if someone is going to take an approach that says, “Look, some ethics matter, right?” there are some good reasons to take that approach. I mean, companies and its shareholders and consumers don’t want to find that their diamonds come from areas where corrupt labour practices are commonplace in parts of Africa, or where child-labour and slaves are used.

Likewise, shareholders and consumers usually don’t like to discover—and would demand change if they did—that some companies operate in southeast Asia, where they might use child labour to manufacture t-shirts. I think those are examples most sensible people can agree on, where you’re going to have an ethical guideline for where you invest where you do business and how you do business. 

Those are things that are beyond the pale. One has to be careful not to have 200 categories of ethical guidelines that may be entirely arbitrary in some sense. Still, I think the examples I just gave are clear examples of what most people would agree should be an unethical investing framework. 

I would submit that the same thing goes with oil and gas from not free nation-states. If you’re going to invest or buy oil from these places, be very frank about what you’re doing. You are supporting regimes as an investor. Maybe that’s the choke point for investors, who might otherwise claim to be ethical. If they’re investing in Saudi Aramco, if they are investing in some state-owned company of some tyranny, which has lousy labour rights, might be anti-female and might be brutal against the majority of its citizens, for whatever reason. I would submit we consider all these factors as investors and consumers.

TNT: Another trend that I found particularly interesting was that while globally we are moving away from the production of coal-fired energy plants, in recent years, we’ve seen China increase in the number of plants they have opened. Perhaps an avenue in which Canada can decrease global dependency on Asiatic coal is its liquefied natural gas. We have seen in China, who has increased imports of liquefied natural gas. Now, what are some of the logistical and political problems that Canadians are faced with in implementing this vision?

Dr. Milke: Well, I think the logistical and political problems are often ones grown here at home. There’s been a lot of self-harm, and I would argue that there’s been self-harm to oil and gas extraction and exports in Canada. It comes from a minority of the population, a minority of environmentalists who are not aware of the fact that natural gas is shipped from Canada in the form of LNG, which could decrease China’s CO2 emissions.

If we don’t supply the demand, then the Australians might do it, or the Qataris may ship there. So, there is potential there. Again, this is less of an ethical issue and more of a self-harm issue at home in Canada. We have protesters that want to prevent pipelines from being built in defense of the ecosystem. However, countries and energy producers have evolved in their adoption of responsible resource development.

TNT: In conversations, The National Telegraph has had with Calvin Helin from Eagle Spirit, who has been very vocal against legislation such as Bill C-48, which would prove detrimental to the day-to-day operations of an Indigenous-owned energy producer. This is very harmful to many Indigenous peoples, who rely considerably on that resource as a means to generate income and to help alleviate the social issues that are a by-product of on- and off-reserve poverty.

With the federal government not holding up its end of the bargain on consultations with Indigenous groups, where we’ve seen that they have mostly consulted with those who hold their ideological stance, how crucial Is it to empower and elevate the Indigenous perspective on oil and gas development?

Dr. Milke: Well, consultations are a double-edged sword that cannot go on forever. And even the Supreme Court has said the First Nations do not have a veto when it comes to development. When it comes to such projects, consultations are just that. While many Canadians have made a lot of money from energy in the past, everyone, including First Nations, should be aware that consultations can also be a problem if it drags on forever. 

If one of the groups holds out, even against the majority of elected officials, as has happened recently in British Columbia in Wet-suwet’en First Nation, that facilitates a national crisis, as Calvin Helin has previously stated, there’s excellent potential for First Nations to thrive and prosper with resource development projects and other industries. The more First Nations are involved, the more we can find solutions to on- and off-poverty in the spirit of economic reconciliation.

For First Nations, that might encompass the construction of a pipeline or energy extraction, as well as financial settlements determined between bands and investors. As Crystal Smith and the former Chief in Council, Ellis Ross, have said ad nauseum, resource development is crucial for at least some First Nations to get out of the poverty trap.

TNT: On the recent price war between Russia and Saudi Arabia, we witnessed some of the most substantial price manipulations for commodity prices, ever. There were negative commodity prices for Canadian crude for the first time in our history. Since then, it has partially rebounded. Now, how does Canada prepare for another price war from some of these other major oil and gas producers?

Dr. Milke: Well, it’s hard to prepare against a state-owned oil company and the parent government when they want to flood the market with oil. That’s difficult to prepare for because you never know when they’re going to do. But what it shows is that oil is not strictly a market commodity given that so much of it is controlled by a quasi-cartel and, in particular, Saudi Arabia.

The best thing that the Canadian governments at all levels can do is not make it absurdly difficult to extract oil and gas in Canada and to export it globally.

Most Canadians know it’s been tough to move ahead on projects, and it’s been even more challenging to get pipelines built in this country and meet global demand. If we don’t, Saudi Arabia will.

TNT: Teck Mine CEO wrote a letter stating that they would not move forward with Teck Mine Frontier. He cited the political environment made future investments unattractive. With that in mind, the radicals on the pro-environmentalist side quote supporters of the local industry also engage in advocacy, which they say makes it hard for investment to occur too. What would you say to that?

Dr. Milke: The reason we’re not getting investment in Canada’s energy sector has much to do with the constantly changing and ever more burdensome regulations that are detrimental to resource extraction. It has a lot to do with activism and the inability to handle those considered extreme.

TNT: When commodity prices were rock bottom, the Irving family, who owns a refinery in New Brunswick, suggested we get our crude to the refinery by tanker through the Panama Canal. As you can imagine, there was considerable pushback, given we have refined oil from Saudi Arabia for so many years. Is this solution problematic as a symptom of the national pipeline crisis?

Dr. Milke: It shows the absurdity of anti-pipeline forces in Canada, where a refinery on the east coast of this country would like to refine Canadian crude and secure its supplies from Western Canada via the Panama Canal. So yes, this example almost speaks for itself.

There is a refinery in Edmonton, but, as with other products, these decisions really should be made as well, as much as possible on a market basis. You build refineries generally where you find major population hubs. That’s why there’s there are refineries in Sudbury, for example, and near the northeastern United States and in the population-rich province of Ontario.

You have refineries on coastlines because then you can send your product anywhere. So, there are refineries in Alberta, but they’re generally not economical. I mean, this debate has gone on for quite some time in Alberta, as to why don’t we refine more crude here. The reason is that it is simply not economical.

TNT: The DNC frontrunner, Joe Biden, mentioned that the investment into the Keystone pipeline project would not go through if he was elected president. Similarly, there was considerable pushback against Energy East from elected representatives and environmentalists from parts of Québec and Ontario as well.

To wrap things up, what would be the message that we give to the DNC candidate as well as to those who are against pipelines on future infrastructure projects within Canada and between Canada and the U.S.?

Dr. Milke Well, whether in Canada or whether these be the president, possible president of United States, the Democratic nominee, now Joe Biden, politicians need to remember that if they make it difficult for liberal democratic allies to develop and ship a product within NAFTA countries, they are harming liberal democratic countries. And there are plenty of regimes out there, from Saudi Arabia to China to Russia that will take advantage of that gap in the marketplace.