The Nanticoke refinery and Canada's energy security

The ongoing petroleum shortages in Ontario triggered by the refinery fire in Nanticoke raise the question: how can Canada, Prime Minister Harper's "energy superpower", experience such shortages?

A real energy superpower would ensure the energy security of its citizens by meeting the International Energy Agency's definition of energy security: the physical availability of supplies to satisfy demand at a given price. The availability of supplies means both a secure supply of energy and the necessary supporting infrastructure; the Nanticoke fire shows how the loss of infrastructure results in the loss of energy security.

However, even the availability of infrastructure does not guarantee security. For example, although Canada is technically self-sufficient in petroleum supply, agreements with the United States mean that Canadian exports cannot be redirected to the Canadian market. NAFTA Article 605 requires Canada to continue supplying the United States with petroleum in the same proportion prevailing in the most recent 36-month period; short of war or an international emergency (Article 2102 (b) (ii)), meeting a rise in Canadian demand would require increased production or more imports, either of which may be problematic.

In fact, Canada's petroleum exports to the United States means that much of eastern Canada relies on imported petroleum from the Middle East, the North Sea, and Venezuela; regions that are prone to geopolitical uncertainty, declining petroleum production, or both.

A degree of energy security can be achieved by maintaining supplies of crude oil in strategic petroleum reserves (SPR). All IEA (International Energy Agency) countries, except Canada, maintain some form of national SPR. Although it would not have directly helped in this case, some countries, including the United States, are considering the expansion of their national petroleum reserves to include gasoline. If Canada had a strategic gasoline reserve, Ontario might have been cushioned from the impact of the gasoline shortages caused by the Nanticoke fire.

Ontario's gasoline shortages are the most recent example of Canada's failure to meet the energy security needs of its citizens. Dependence on potentially unreliable sources of imported energy and the shortcomings of existing infrastructure demonstrate the need to rethink both how Canada meets its energy requirements and uses energy.

A shortened version was published Globe and Mail 3 March 2007