When Donald Trump approved the proposed Keystone XL oil pipeline to bring Alberta bitumen to U.S. Gulf Coast refineries he said it would “reduce our dependence on foreign oil.” Given that the pipeline, if built, would mainly ship Canadian oil to U.S. Gulf coast refineries, Trump showed, perhaps inadvertently, that he considers Canadian oil to be American. Unfortunately, his assumption is based on fact.
The North American Free Trade Agreement’s (NAFTA’s) energy proportionality rule (Article 605) gives the U.S. virtually unlimited first access to most of Canada’s oil and natural gas. According to the NAFTA rule, Ottawa must not reduce oil exports to the U.S. like it did during international oil shortages in the 1970s to divert these supplies to Eastern Canadians who relied on imported oil then, as they still do now. Under NAFTA Article 605, Ottawa must continue to export the same proportion of oil (and natural gas and electricity) as it has in the past three years even if eastern Canadians are running short and freezing in the dark.
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