By: Nojan Kamoosi on
Kevin O'Leary, former Conservative Party leadership candidate, in an interview on January 18, 2017
Canada spends on average $2.2 billion a year on Saudi oil, according to Statistics Canada.FactsCan Score: False
In an interview explaining his bid for the Conservative Party leadership, Kevin O’Leary said, “Canada spends $12 billion a year on oil from Saudi Arabia due to lack of pipelines that transport oil from the west coast to the east coast.”
There are two claims here: (1) Canada spends $12 billion a year on Saudi oil and (2) Canada buys Saudi oil because there is no trans-Canada pipeline. We’ll check the first part only, and delve into the second just for context.
Does Canada spend $12 billion a year on Saudi oil?
O’Leary is off by $10 billion. Canada spent $1.7 billion on oil from Saudi Arabia in 2016, according to Statistics Canada, and an average of $2.2 billion a year since 2012.
Canada’s annual spending on oil from Saudi Arabia
Source: Statistics Canada
The sole Canadian buyer of Saudi oil appears to be Irving Oil, a refinery based in New Brunswick. Natural Resources Canada would not confirm any additional purchasers, and Irving’s position can be concluded from the data. According to Statistics Canada, New Brunswick is the destination for 100 per cent of Saudi oil imports since 2012. The National Energy Board confirmed Irving is the only refinery in New Brunswick and the largest refinery in Canada.
The origin of the $12 billion figure is unclear, and O’Leary did not respond to our requests for comment. Every expert we spoke with gathered their data on oil imports from Statistics Canada or the National Energy Board, which uses Statistics Canada data.
Brandon Schaufele, a business professor at the University of Western Ontario, said O’Leary could potentially be referring to Canada’s expenditure on oil imports from all countries in the Middle East and North Africa (MENA) region. However, including those countries doesn’t come close to $12 billion. Canada’s 2016 expenditure on oil from all MENA countries was $3.6 billion.
Mr. O’Leary’s claim is false. Spending on Saudi oil in 2016 was $1.7 billion, which is nearly six times under O’Leary’s $12 billion figure.
Would dependence on Saudi oil decrease with a new trans-Canada pipeline?
For context, we dug into the second part of O’Leary’s claim linking an absence of pipelines to the high cost of oil.
Energy independence and pipeline development are commonly linked topics in Canadian politics. In the case of a trans-Canada pipeline, a clear link to energy independence is tricky to make. And politicians, oil companies, and environmental groups have made contradictory claims.
Energy East is the only major Canadian pipeline proposed in recent years that would link the west coast of Canada to the east coast. This project is run by TransCanada Corp. Proponents of the project assert it would increase the global availability of Canadian oil.
Ian Whitcomb, the president of Irving Oil, said in 2016 that the company would continue to buy foreign oil even with an Energy East pipeline. “We will add Western Canadian crude to our portfolio as the economics dictate, but probably not at the expense of our Saudi barrels,” he said.
A 2016 report from Environmental Defence, a non-profit that advocates for limiting fossil fuel use, concluded that much of the oil transported by Energy East will be for international export, not for domestic use. The group pointed to a lack of economic incentives for purchasing heavy crude oil from Alberta, along with limited refining capacity among Canadian companies.
TransCanada has refuted the Environmental Defence position. The company acknowledged that some Energy East oil will be for export, but said it plans to meet domestic demand too. On energy independence, TransCanada cited Saudi Arabia as a market that it hopes will be less important to Canada with a new pipeline.