In 1977, when the United States wanted to ship natural gas from Alaska to the Lower 48, a deal was struck with Canada. It included a treaty that promised the free flow of hydrocarbons by pipeline from the U.S. to the U.S. – by way of Canada.
“It is clearly evident that by working together on this gigantic undertaking, both nations can derive benefits far outweighing those that either country could obtain by proceeding on its own,” said Allan MacEachen, then the deputy prime minister.
That gas pipeline was never built. The treaty was forgotten. But it may be about to come in handy, because 44 years later, Canada-U.S. pipeline politics have grown a lot less co-operative.
Americans burn the most oil of any country. They are laggards on climate policy. Yet it has become politically useful – and easy – for Democrats to burnish their green credentials by engaging in performative opposition to a few high-profile Canadian pipelines, even as they allow the U.S. oil industry and its pipeline network to expand.
First there was president Barack Obama, who vetoed the Keystone XL pipeline in 2015. President Joe Biden reaffirmed that on his first day in office. For Canada, these American moves are a big, costly problem even though, as climate policy, they are empty gestures. The U.S. this summer used as much petroleum as it ever has.
Enbridge’s Line 5, which helps move Alberta and Saskatchewan oil to Ontario and Quebec – by way of Michigan – is the latest Canadian pipe in political crosshairs. It includes a seven-kilometre section on the lakebed at the Straits of Mackinac. Line 5 found itself turned into a political issue after an oil spill in 2010 from another Enbridge pipeline in southern Michigan. Shutting Line 5 was among Gretchen Whitmer’s promises when she became Governor in 2018. It was an obvious target, since most of what it carries is simply moving from Canada to Canada.
The Canada-U.S. relationship isn’t what it was. The question now is: What will it be?
Why is Joe Biden, who hung up on Keystone XL, desperately calling OPEC’s oil hotline?
The fight between Michigan and Enbridge ended up in court and, after mediation failed last month, Ottawa invoked the Transit Pipelines treaty – the one drawn up to ship Alaskan natural gas south. The treaty’s wording calls for “uninterrupted transmission” of oil or gas starting in one country and going to that same country while passing through the other.
The first step is diplomatic negotiation. Binding arbitration could follow. A win is not assured.
Canada’s national interest is once again snarled in the web of American politics. Blocking a planned pipeline such as Keystone XL was bad enough. Threatening to close a decades-old link that delivers a key supply of oil to Ontario and Quebec is much more hostile.
The Biden administration would prefer to ignore Ms. Whitmer’s gambit; a close ally of the President, she seeks re-election next year. For her, opposing Line 5 delivers political returns, with costs borne by Canada.
It’s true that the world is entering an energy transition to lower carbon emissions. But it’s called a transition for a reason: Neither Canada nor the U.S. is in a position to go cold turkey on fossil fuels. This month, the price for a barrel of oil has spiked toward US$80, as a recovering global economy meets constrained supply. Natural gas prices have had an even more rapid run-up. Both stoke inflation.
The fuels in Line 5, and in scores of other pipelines criss-crossing North America, will some day be a lot less important. But that day is in the future. Right now, Line 5 matters to the lives of millions of people, and to Canada’s economy.
If the pipeline were to be blocked, oil would still move from Western Canada, though by more circuitous routes, such as rail. Canada might also end up importing more oil from abroad – possibly from the U.S.
In Michigan, Ms. Whitmer has made her political calculation. She’s not trying to shut down her state’s only oil refinery, in Detroit. She’s not against the building of gas-guzzling F-150s at Ford’s Dearborn Truck Plant, nor is she aiming to raise the price Michiganders pay for gasoline. She’s simply making as much noise as possible about a pipeline whose closing would mostly affect people who are not her constituents.
All of which leaves Canada in a difficult place – having to rely on an old, dusty and never-used treaty to get Washington’s attention.
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