By Mike Hoff For the American consumer, purchasing oil and gas from their Northern Neighbour … er, Neighbor is a no-brainer. Canada is overtly cordial to the United States, financially secure, close enough for multiple safeguarded pipelines and transportation routes, apolitical (albeit more socialist then the Bush government would’ve preferred), and, as both sides like to brag, share the “longest undefended border” in the world. There is little concern petroleum will stop shipping south due to a trade dispute (ala Mexico), price gouging (e.g. Russia and Ukraine), outrageous dictatorial demands (Venezuela), warlords skirmishes (Nigeria), or a simple lack of supply. Canada is oozing petroleum byproducts, from northern Alberta – that’s between Montana and the North Pole, for you geographically challenged Yanks – to the coast of Newfoundland (north of New York) to the Alaskan Frontier (where Palin comes from). Canadian oil and gas are relatively cheap, plentiful, and unfettered by sociopolitical concerns that say – just picking a country at random here – Iraqi exporters would face. And yet … As American wildcatters know, almost all the oil that’s ever going to be found from the Gulf of Mexico to the Bering Straight is already mapped out and ready for extraction. The chances of finding a large on-shore deposit – shale gas notwithstanding – are slim, which leaves off-shore drilling and the Athabasca Oilsands as the primary sources of petroleum within North America. To reiterate, the Oilsands deposits are economically priced, abundant (estimates of over 1.7 trillion barrels), and easy to transport – they just happen to be located in the new Ground Zero for environmental apprehension and liberal flag-waving. The Oilsands operations in northern Alberta touch upon ecological issues from deforestation to water recycling to greenhouse gas emissions. No less a luminary then Hollywood director James Cameron has been deployed north to have a look-see – and Mother Jones covered it! There’s something coker-ing in the Great White North that impacts all residents on both sides of the 49th Parallel, and the inconvenient truth of the Oilsands is not lost on environmental activists. And rightfully so; converting bitumen from the Canadian Shield into crude oil is expensive – costing $28 / barrel of bitumen – and dumps byproducts into the nearby water-table. It’s a wasteful and ecologically damaging process (compared to standard drilling) that is only feasible when fuel costs are high. At sea, the environmental concerns of off-shore drilling are well known, and reassurances of safety via regulating Big Oil blew up with the Deepwater Horizon rig. Can heavy petroleum be extracted and shipped from Canada to American consumers securely, cheaply, and without bloodshed or poverty – yes. Will the process, or unforeseen disaster of said enterprise, create an unrecoverable blemish on the planet for generations to come – um, maybe? Obviously this is a simplistic view of things – both governments have enforced local and federal law to ensure the safety and health of their people, and despite the stereotype of Big Oil it behooves the producers and transporters to address environmental concerns beyond regulatory requirements. But perception is critical for American sentiment and dollars, witnessed by the Obama Administration’s efforts to spin the need for Energy Security vs. a growing dissatisfaction from liberal powers (see Hollywood above) that frown upon the potential destruction of 20 million acres of timberland and 500 km of shoreline. U.S. consumers (and Canadians for that matter) want cheap oil and gas but apparently aren’t prepared to displace Bambi or Flipper to get it. But this is not coffee or sweatshirts or mop-topped teenage heartthrobs being imported – not only do Americans need fuel to survive the climate, but its absence can stymie economic growth, a bitter pill to swallow whilst recovering from the current economic downturn. Adding upwards of 340,000 jobs to the US economy (by some estimates) is not something Obama or the next U.S. President can ignore. And the accessibility and purchase of petroleum is not without political pressure, even from Canada. The People’s Republic of China has made it clear that they will happily allow a chuck of North America to be scorched to fuel their economic resurgence at a reasonable price. It’s not lost on the U.S. and its allies that keeping Canadian petroleum to itself is a dagger in the heart of Chinese plans for World Domination (given the Russians may carve more pipelines from Siberia to southeast Asia). Even environmentalists flinch at the thought of providing the world’s largest C02 emitter with more fuel for the fire. Purchasing oil merely to keep it away from a political rival is not reason enough to keep open the tap from the Great White North. But rising import costs, eternal turmoil in the Middle East, saber-rattling from South American dictators, and a slow moving economy may tip the scales. If only Canada had a non-Christian, militant dictatorship in power… Mike Hoff works for the private consulting company, Hussar Innovations