How a win for Trump or Biden could dramatically change Canada’s oil industry
This year has already been challenging for Canada’s oil and gas sector, with COVID-19 lockdowns and a global price war between Russia and Saudi Arabia dragging the price of oil down to historic lows.
While oil prices have rebounded since then, there’s another 2020 wildcard on the table: the U.S. election, the results of which will have major ripple effects in Canada.
U.S. President Donald Trump and former U.S. Vice-President Joe Biden have offered two vastly different plans on oil and gas. Biden has vowed to invest more than US$1 trillion to combat climate change and transition away from oil and gas, while Trump is vowing to expand U.S. production of fossil fuels, particularly on offshore drilling.
The two candidates have also made clear their opposing views on the Keystone XL pipeline, a multi-billion dollar project that would transfer more than 800,000 barrels per day of crude oil from Alberta to Nebraska. Biden has vowed to cancel it, while Trump wants to see it built as soon as possible.
Experts say the fate of Keystone XL would have major implications for Canada. In March, Alberta announced an investment of US$1.5 billion into the project in hopes of having the pipeline operational by 2023.
Here’s a look at each candidate’s plans on oil and gas and how they would affect Canada.
THE BIDEN PLAN
One of Biden’s biggest election promises is a historic investment in green energy and environmental justice. Biden says he would spend US$1.7 trillion over 10 years to fund what he calls a “clean energy revolution.”
Biden’s plan includes adding solar and wind farms across the U.S., building more charging terminals for electric cars and expanding the use of clean energy in industries such as transit and construction to cut fossil fuel emissions. The Democratic candidate has vowed to ensure that the U.S. reaches net-zero emissions “no later” than 2050.
The heart of Biden’s plan is a fundamental shift toward renewable energy with the aim of becoming a global leader in green technology and innovation. However, he doesn’t go so far as to ban fracking, which accounts for millions of barrels of oil per day and can lead to groundwater degradation.
In his speech at the Democratic National Convention, Biden drew a direct line between fighting climate change and creating new American jobs.
We can, and we will, deal with climate change. It's not only a crisis, it's an enormous opportunity — an opportunity for America to lead the world in clean energy and create millions of new good-paying jobs in the process,” he said.
Part of that plan also includes killing the Keystone XL pipeline. Biden has made it clear that he does not want to see the project completed, calling it “tarsands we don’t need.” If elected, Biden has promised to cancel the project, saying Keystone XL doesn’t make sense economically or environmentally.
THE TRUMP PLAN
Supporting the U.S. oil and gas sector has long been a key part of Trump’s political strategy, and his 2020 campaign has highlighted steps he has taken to make it easier for companies to drill on American territory.
Among Trump’s online list of “achievements” is an executive order he signed to expand offshore oil and gas drilling, added financing for fossil fuel projects and the approval of several pipelines, including the Keystone XL and Dakota Access pipelines.
Unlike Biden, Trump is keen to get Keystone XL built as quickly as possible. In January, the Trump administration approved a right-of-way that would allow the pipeline to be built across U.S. land. However, the pipeline still faces a slew of legal challenges from environmental and Indigenous groups that call the pipeline unconstitutional.
The Obama administration previously rejected the pipeline
Trump has also moved forward on a plan to approve oil and gas drilling at Alaska’s Arctic National Wildlife Refuge, a vast conservation area that has been protected for more than 60 years and is believed to sit atop billions of barrels of oil. Environmentalists have vowed to fight the project, saying oil extraction on the land would be a death knell for the already vulnerable Alaskan ecosystem.
In his speech at the Republican National Convention, Trump tried to cast Biden’s plan as bad for the economy while falsely suggesting that Biden had promised to completely abolish U.S. fossil fuels production.
“Millions of jobs will be lost, and energy prices will soar. These same policies led to crippling power outages in California just last week. How can Joe Biden claim to be an ‘ally of the light’ when his own party can't even keep the lights on?” Trump said.
HOW CANADA WOULD BE AFFECTED
While Trump and Biden’s plans for Keystone XL diverge dramatically, Werner Antweiler, a business professor at the University of British Columbia and an expert in international trade, says he’s not optimistic that the pipeline will ever get built, thanks to global market trends.
“These projects that looked promising at the time they were proposed may no longer meet the test of being cost effective,” Antweiler told CTVNews.ca in a phone interview.
A lot has changed since Keystone XL was first proposed in 2012, and the pandemic has meant less demand for oil from major industrial consumers, such as airlines. Earlier this year, BP's new chief executive Bernard Looney speculated that demand for oil may never return to pre-pandemic levels.
On the current state of Keystone XL, Antweiler says the Trump administration has been handling the pipeline “as incompetently as can be expected of a hyper-partisan administration.”
“Everyone who has been analyzing this has come to the same conclusion: in an attempt to clear the way for natural resource projects, the Trump administration has been playing fast and loose with environmental rules,” he said. “The result is quite simple. In the attempt to fast-track these projects, they’ve actually induced delays because it opens up court challenges.”
The longer Keystone XL stays mired in legal challenges, the less interested stakeholders may be in getting the project built, Antweiler says.
“The risks are very signifiant because Alberta government has become invested in this project.”
If Trump wins on Nov. 3, Concordia University economics professor Moshe Lander says he is doubtful that the Republican president would be able to get much done on a cross-border pipeline.
“Trump publicly says he’s very much in favour of these, but he’s had four years and he’s accomplished nothing,” Lander told CTVNews.ca in a phone interview. “I don’t see there being anything he can really deliver, especially when he’s been so nasty to Canada, calling us cheaters and dishonest and sneaky.”
As for the future of Alberta’s oil sector, Lander says the province simply can’t rely on the U.S. as a customer for much longer because the U.S. is quickly moving toward becoming energy self-sufficient. He described Keystone XL pipeline as “a poisoned chalice” that he believes will suffer a slow death.
“I think that Canada’s medium- to long-term relationship with oil and gas with the U.S. is doomed, and I think Alberta knows it,” Lander said.
“Biden can try to reconnect all he wants, but he’s not looking to reconnect on energy. So I don’t see in the next five to 10 years where anyone in U.S. leadership says we really need to to deepen our ties to Canada in terms on energy security.”
If Keystone XL doesn’t go through, be it by Biden’s withdrawal or simply diminished interest from investors, Lander says he expects that the bubbling separatist sentiment in Alberta, stoked by the so-called Wexit movement, will grow stronger.
“If the U.S. door starts closing (on oil), then I think you’re going to hear the screams from Alberta get even louder to the federal government … to the point that it challenges the unity of the nation,” Lander said.