Having a diversified economy that is non-reliant on one major customer is important for any country. For Canada, this importance is magnified, as selling its most abundant resource, oil and gas, to its biggest customer, the United States, faces potential problems under the Biden administration.
To see Canada’s long-term growth be fruitful, diversification of its markets is necessary. In order for that to happen, the country needs energy diversification with a wider and larger customer base.
Energy diversification could be taking the extracted oil and natural gas, and transform them into other products such as LNG, biofuels, transportation fuels, and other sectors that require oil and gas.
As well, with an industry so tied and connected to cyclical market prices that the country has no control over, there is potential for boom cycles, but also down cycles, such as in 2020, putting Canada in a vulnerable position. A diversified and resilient economy offers insurance and protection against sometime volatile market prices.
To be fair, as the world’s economic state recovers and sees a finish line with regard to COVID-19, global demand for oil around the world is still strong and crucial and will continue to be in high demand well into the future. Even in the face of climate change and renewable energies, they require oil and gas products.
With world-class production and innovation, Canada’s oil and gas is intriguing for more than just the U.S. Striking business with partners in Asia and Europe would go a long way in helping Canada become less reliant on the U.S., as Biden has proven to be a tricky partner and the country looks to become more self-sufficient.
The axing of Keystone XL was a costly blow to both Canada and Alberta. It has taken a toll on jobs and the industry, as well as 21 republican-led states suing Biden, alleging he overstepped presidential authority in the cancellation. With Biden’s views on the pipeline and industry (even with U.S. imports of Canadian crude oil strong), it couldn’t hurt for Canada to find more willing customers and partners for their oil and gas.
A glut of oil and gas product, but inadequate pipeline capacity, has stifled Canada, forcing its product to be sold at a discount.
This is why projects such as Trans Mountain and Coastal GasLink take on so much more importance. They bring the potential to reach the aforementioned Asian market, who is one of the world’s largest buyers.
These projects have crucial roles to play in helping Canada’s economy not only bounce back after the pandemic, but be prosperous in its long-term growth, helping expand other industries and create employment opportunities.
A more diverse customer base can only be a positive for Canada. It would also be a boon for the country if it could become less reliant on oil from foreign suppliers. It would save the country billions on a yearly basis.
Having more than one major customer would help Canada obtain world prices for its oil. With global demand expected to rise over the next few years, and global population in the rise, it presents a tremendous opportunity for Canada to gain increased market share within the global oil market.