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Should Canada be 'on notice' after Trumps oil deal with Venezuela · INSIGHT TODAY

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  Speaker 1: U.S.
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  Speaker 2: President Donald Trump says he has reached a deal with
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  Speaker 2: Venezuela that will give the U.S. majority control over Venezuela's
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  Speaker 2: oil fields. In a social media post from the president,
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  Speaker 2: he says Trump's historic oil deal with Venezuela realigns global
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  Speaker 2: energy and puts OPEC and Canada on notice. So what
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  Speaker 2: does this deal mean for Canada's oil industry? Heather Exner-Perot
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  Speaker 2: is a senior fellow and director of energy, natural resources
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  Speaker 2: and environment at the Macdonald-Laurier Institute. And she joins me now.
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  Speaker 2: Nice to see you. Thanks for coming on.
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  Speaker 3: Thanks for having me.
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  Speaker 2: So President Trump is talking up this deal with Venezuela,
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  Speaker 2: which if we're to believe his rhetoric will be, you know,
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  Speaker 2: a big boon for the U.S. energy sector. They could
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  Speaker 2: be getting a big chunk of Venezuela's oil reserves. He
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  Speaker 2: said in a social media post that this move should, quote,
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  Speaker 2: put Canada on notice. Is the oil patch worried about
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  Speaker 2: what's to come?
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  Speaker 3: I don't think so.
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  Speaker 1: You know, you have to appreciate the oil patch goes
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  Speaker 1: through things like the Strait of Hormuz, Trump tariffs, COVID.
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  Speaker 3: I have other Venezuelan news, so they.
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  Speaker 1: Have pretty strong stomachs, and I don't think this kind
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  Speaker 1: of social media post from Donald Trump affects them too much. Already, though,
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  Speaker 1: we did see a few extra 100,000 barrels come from
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  Speaker 1: Venezuela following the January news. Chevron was able to ramp
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  Speaker 1: up capacity, so we are seeing a bit more competition
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  Speaker 1: in Gulf Coast refineries, but I think the way that
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  Speaker 1: President Trump is describing this deal is an exaggeration.
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  Speaker 3: And pretty far off, you know, that it could reach
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  Speaker 3: the potential that he's seeing.
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  Speaker 2: Venezuela does produce an oil that is almost geologically and
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  Speaker 2: chemically identical, if I have it right. It's a heavy
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  Speaker 2: crude that is very similar to what comes out of
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  Speaker 2: the ground in this country. Is there a long-term risk
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  Speaker 2: here for Canada? Could Canada be replaced as the choice
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  Speaker 2: supplier for the American markets?
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  Speaker 1: Yeah, so about 10% of global oil is heavy oil.
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  Speaker 1: Canada is the biggest heavy oil producer in the world.
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  Speaker 1: And we do compete with Venezuela, with Mexico, with Iraq,
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  Speaker 1: primarily for that smaller market. So there's always competition with Venezuela.
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  Speaker 1: They've seen their production decrease in the last few years.
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  Speaker 1: And for the good of the Venezuelan people, I mean,
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  Speaker 1: it would be good for them if they had a
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  Speaker 1: bit more increase. And I have to say, those Gulf
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  Speaker 1: Coast refineries were developed in the 1970s to handle Venezuelan crude.
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  Speaker 1: And it was Canadian heavy oil that came later that
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  Speaker 1: kind of displaced that Venezuelan market.
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  Speaker 3: So we're always competing.
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  Speaker 1: But the way it's being described, you know, I think
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  Speaker 1: at the margin, we may compete with the Gulf Coast.
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  Speaker 1: On the bright side, Venezuelan may be selling, you know,
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  Speaker 1: less oil to other markets in Asia, in particular China.
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  Speaker 1: And so that's an opportunity for Canada and the Pacific.
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  Speaker 1: So if you're just moving deck chairs, it's not too
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  Speaker 1: big of a deal. You can sell your heavy oil elsewhere.
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  Speaker 1: But always, we have to be competitive, not just with Venezuela,
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  Speaker 1: but with Brazil, with Guyana, with everyone that wants to
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  Speaker 1: sell more oil.
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  Speaker 3: Into the market.
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  Speaker 2: You have a new piece out in the hub with
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  Speaker 2: the headline, Trump has given Canada more than it has
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  Speaker 2: taken away. You argue Trump's actions have actually been a
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  Speaker 2: plus for the country's energy sector. Expand on that for me, because,
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  Speaker 2: you know, many Canadians feel nothing good has come out
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  Speaker 2: of the Trump era. And you're saying, well, not so fast.
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  Speaker 3: So Canada is a huge commodities exporter. More than half
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  Speaker 3: of our trade, our merchandise exports are commodities and all
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  Speaker 3: commodities are up. So gold has been up for a
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  Speaker 3: little while.
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  Speaker 1: Oil is obviously over $ 20 up than it was before
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  Speaker 1: Trump invaded Iran, blockaded the Strait of Hormuz. And now
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  Speaker 1: you see copper hitting all time highs, uranium is higher, potash.
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  Speaker 1: So for a country like Canada, Trump has really moved
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  Speaker 1: us into an upswing of the commodity cycle. We are
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  Speaker 1: selling more. You've seen that we've had five trade surpluses
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  Speaker 1: in a row and the Canadian dollars is starting to recover.
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  Speaker 1: So what he has given away, kind of with the
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  Speaker 1: trade war, I think he's given back globally and the
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  Speaker 1: ability of.
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  Speaker 3: Canada to sell its energy and resources to the rest
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  Speaker 3: of the world.
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  Speaker 1: And I just think he's also given us, you know,
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  Speaker 1: kicked us out of our complacency a little bit. So
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  Speaker 1: we're a little bit more ambitious of wanting to build
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  Speaker 1: all those mines and those pipelines and those ports.
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  Speaker 3: And I think it's pretty bright days ahead, actually, for Canada.
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  Speaker 2: As Jean Chrétien once joked, maybe we should give Donald
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  Speaker 2: Trump the order of Canada because people care more about
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  Speaker 2: some of the institutions in this country. And certainly they're
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  Speaker 2: spurring some projects along, as you say. As you've probably heard,
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  Speaker 2: some voices are calling for an export tax on Canadian
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  Speaker 2: energy products. to retaliate against the United States for the
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  Speaker 2: economic sabotage we've been seeing. Even former Alberta Premier's Rachel Notley,
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  Speaker 2: Jason Kenney, they were on this program last week. They
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  Speaker 2: say it should be on the table. I take it
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  Speaker 2: you argue that that would be self-defeating. Tell me why.
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  Speaker 3: I do argue it would be self-defeating.
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  Speaker 1: So, you know, we're talking about we're coming into a
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  Speaker 1: commodities upswing. We're getting more money for the commodities that
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  Speaker 1: we do sell. And many people are looking at Canada
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  Speaker 1: as a reliable, trustworthy partner. And I've seen that the
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  Speaker 1: way that China has weaponized critical minerals, the way Iran
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  Speaker 1: weaponized oil, the way that Russia weaponized natural gas, using
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  Speaker 1: it for political advantage, going outside the boundaries, the normal
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  Speaker 1: boundaries of the market, has not been beneficial for them.
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  Speaker 1: Maybe in the initial short term, immediately, you get some
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  Speaker 1: political gain from it. But in the medium and long term,
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  Speaker 1: it's obviously very damaging to your economy and to the
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  Speaker 1: faith that buyers have in you. And people work very
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  Speaker 1: hard to get off of dependence on you.
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  Speaker 3: So I don't want to.
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  Speaker 1: Jeopardize the fact that we are going into this upswing.
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  Speaker 1: We are getting way more money due to Donald Trump's actions.
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  Speaker 1: We're getting a lot more money selling that oil for
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  Speaker 1: a lot higher price. And other people are starting to
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  Speaker 1: look at us.
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  Speaker 3: And so I think we have a great opportunity in
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  Speaker 3: front of us. We can ride this wave.
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  Speaker 1: We can use these energy and resources to build new alliances,
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  Speaker 1: to increase our soft power.
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  Speaker 3: And also to gain more wealth and prosperity for the country.
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  Speaker 1: And so I don't want to move from, you know,
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  Speaker 1: we've been restricting and taxing production to restricting and production
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  Speaker 1: the exports. I want us to be rich and powerful.
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  Speaker 1: And I think selling it in the free market is
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  Speaker 1: the way to do so.
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  Speaker 2: I mentioned Jason Kenney. He argues that an export tax.
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  Speaker 2: should be a possibility, but it should only be used
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  Speaker 2: as leverage if Trump does something, as he puts it,
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  Speaker 2: really reckless, or if there is something existentially damaging done
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  Speaker 2: to the Canadian economy. Do you think that using energy
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  Speaker 2: as a bargaining chip should be ruled out entirely? Or
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  Speaker 2: can you imagine a scenario, maybe it's remote, a remote
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  Speaker 2: possibility of it happening, but can you imagine a scenario
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  Speaker 2: where it might be necessary to use something like this?
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  Speaker 1: So unfortunately with oil, we have a lot of mutual independence.
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  Speaker 1: I think a lot of people appreciate now that a
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  Speaker 1: lot of what Alberta sends to the United States comes
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  Speaker 1: back up into Ontario after passing through there. We are
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  Speaker 1: not self-sufficient in condensate or the dilute you need for
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  Speaker 1: heavy oil. We need to get a lot of that
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  Speaker 1: from the United States. And so even though we are
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  Speaker 1: a net exporter, the word net.
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  Speaker 3: Does a lot of work there.
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  Speaker 1: And overall, it's a pretty interdependent system that Canada benefits
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  Speaker 1: greatly from. I think why you may not want to,
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  Speaker 1: you know, kind of, you know, threaten it every week
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  Speaker 1: as we've been doing is because it does spook investors
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  Speaker 1: and buyers that you say, well, maybe we don't want
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  Speaker 1: to invest in that project.
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  Speaker 3: Maybe we don't want to invest.
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  Speaker 1: In that pipeline because this is maybe something that will
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  Speaker 1: be used.
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  Speaker 3: Politically going forward. And so if that existential threat comes
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  Speaker 3: forward in the future, you can say, okay, you know,
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  Speaker 3: maybe we have to rethink things. But for right now,
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  Speaker 3: I would think.
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  Speaker 1: Ken would want to work on, you know, swaging conservative
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  Speaker 1: investors were a good place to invest.
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  Speaker 3: And we won't be the one. I have to also
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  Speaker 3: point out, Americans are paying more for Canadian oil.
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  Speaker 1: They are having an affordability crisis. This trade war is
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  Speaker 1: not good for them. It's not popular. And right now
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  Speaker 1: that's Donald Trump's fault. And I don't think we want
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  Speaker 1: to make it Canada's fault that Americans' energy is more
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  Speaker 1: expensive going into the midterms.
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  Speaker 2: All right, let's leave it there. Heather Exner-Perot, Senior Fellow
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  Speaker 2: at the Macdonald-Laurier Institute. Thanks for coming on.