Story of the Week: October 2023

This article originally appeared in the Western Standard.  Canada’s energy sector is a major national security asset, a fact which should be made abundantly clear by the recently declared war between Israel and Hamas. The potential for escalation of this conflict is already casting uncertainty over global energy markets due to the centrality of the Middle East to global energy production and transport routes. You don’t have to be a market analyst to see what’s happening. In the wake of the Hamas attacks, European natural gas and oil futures jumped 14%. With instability in the region growing, this uncertainty will continue to drive fluctuations due to concern over reliability of supply. Canada, well-known for its political stability and with a reputation for responsible natural resource development, should be positioned as a bulwark against these threats. Unfortunately, despite these merits, the Canadian oil and gas industry finds itself entwined in a manufactured paradox. It stands as a stable supplier of fossil fuels amidst global conflicts, yet simultaneously faces unrealistic regulatory demands and misguided pushback from groups set on imposing ever accelerating Net-Zero policies. Their goal is the eventual extinction of Canada’s natural resource sector. These policies — including federal and provincial carbon taxes and other forms of government imposition — are already making life harder for Canadians; elevating food, energy and heating prices. They are also making it increasingly difficult to produce Canadian energy and get it to market. Meanwhile, threats to global supply will only drive prices higher. The world is going to continue to consume oil and gas and if our resource sector is hobbled by unnecessary regulation and reductions in domestic investment, that energy will gladly be provided by nations far less concerned about our cost of living, human rights, or CO2 emissions. With Canadian suppliers being prevented from pursuing opportunities to supply international markets, our EU partners have been forced to look elsewhere. Last week for example, France’s state energy firm, TotalEnergies, signed a 27-year agreement to purchase natural gas from Qatar, beginning in 2026. The notion of abandoning investments in Canadian oil and gas threatens not only our domestic economic prospects but it also propagates risks on a global scale by eroding a politically stable and secure source of energy amid an unpredictable geopolitical environment. The case for divestment from Canadian oil and gas rests on the idea that it serves some long-term aspirational goal. But what it actually accomplishes is increased global dependence on the regimes of Russia, Venezuela and the member nations of OPEC. It undermines confidence in the industry and exposes Canada — and Canada's allies — to dangerous vulnerabilities through energy supply shocks. Canadian banks, investment funds, corporations and individual shareholders have a responsibility to ensure our energy sector is appropriately financed to encourage production, distribution and yes, the innovation necessary to drive emission reduction efforts in our energy sector. Not only do our economy and the environment benefit from a robustly financed Canadian energy sector, but recent events have made clear that our national security and the security of our global partners depend on it. Gina Pappano is Executive Director of InvestNow, a Canadian not-for-profit dedicated to raising awareness of the dangers of divestment in Canada’s energy sector.