Trudeau’s TMX conundrum
WIKIMEDIA COMMONS/Adam Schultz
Prime Minister Justin Trudeau of Canada after a meeting of the North Atlantic Council, Wednesday, July 10, 2024
Trade data out this week show the extent to which the newly opened Trans Mountain pipeline is affecting the energy sector and the economy, illustrating Canada’s increasing reliance on fossil fuels.
The value of crude exports jumped 13.3 per cent in June, Statistics Canada reported this week. The increase partly reflects higher oil prices that month, but is mostly due to a surge in volumes, which were up by more than 10 per cent. That’s one of the biggest one-month increases ever.
The data underscore one of the ironies of Prime Minister Justin Trudeau’s administration. Trudeau has never been considered friendly to the oil patch, particularly now that he’s introduced a hard cap on greenhouse gas emissions for the sector.
But his government is overseeing an economy increasingly reliant on oil and gas. In June, oil exports made up 19 per cent of total merchandise shipments abroad. That’s the highest since 2022, when prices were well above current levels.
Since the start of 2022, oil has accounted for 17.5 per cent of merchandise exports. Under Stephen Harper, that number was 13 per cent.
The increasing reliance on energy sales suggests we are facing one of two possible outcomes. Either the transition away from fossil-fuel production will be prohibitively expensive for the economy, or cutting emissions from the oil and gas sector will lean heavily on technological improvements such as carbon capture. Those are the two options, unless oil prices collapse.
