However, the IEA is also telling consumers around the world not to worry much about supply shortages. It notes that OPEC and Russia could boost oil production by 2 million barrels a day (mb/d). It also hopefully states that, “If sanctions on Iran are lifted, an additional 1.4 mb/d could be brought to market in relatively short order.”
Read the above bits again. Just last month, the IEA wanted governments to do everything they can to kill oil. Now, the IEA is begging OPEC and Russia to open the oil spigots more. It also even pins some hope on Iran. This would be the same Iran which funds Hezbollah and Hamas to attack Canada’s only liberal democratic ally in the Middle East, Israel.
Careful readers will note that the IEA is not calling on OPEC nations and allied members to invest more to grow oil production. The IEA just wants them to help the world overcome a looming oil supply shortage starting about now.
For Canadians, and even Americans, this is a distinction without a difference. It should also be maddening given the events of the last seven years.
In 2014, Saudi Arabia flooded the world market with oil, artificially depressing prices. It was an effort to harm both the U.S. shale oil sector and Canada’s oil industry. The effort succeeded, throwing Alberta, Saskatchewan and Newfoundland & Labrador—and its energy workers—into a slump from which none have fully recovered.
In early 2020, Saudi Arabia’s energy ministry directed the state-owned oil company to do a repeat. It ordered Saudi Aramco to raise production significantly and thus flood the world market with cheap oil to depress prices and harm competitors once again. The Russians then exacerbated the price collapse by refusing to adhere to a 2016 Saudi-Russian agreement on the matter.
On the Russian side, as Sergey Sukhankin pointed out in a University of Calgary School of Public Policy paper last year, “Igor Sechin, president of Rosneft, convinced President Vladimir Putin that if Russia could keep oil prices below $40 a barrel for an extended period, U.S. shale oil would no longer be economically attractive and the Americans would lose market share.”
Here’s another bit of useful context: The very countries that the IEA is now begging to increase oil production are among the world’s worst violators of civil rights. Of the 13-member OPEC nations, the Washington D.C.-based Freedom House (which categorizes nations as Free, Partly Free, or Not Free) ranks two countries as Partly Free (Kuwait and Nigeria).
Eleven others are tagged as Not Free: Algeria, Angola, Congo (Republic of), Equatorial Guinea, Gabon, Iran, Iraq, Libya, Saudi Arabia, and Venezuela. For the record, Freedom House also ranks Russia, the other nation to whom the IEA now appeals, as Not Free.
If anyone needs an example of the brutality of some of these regimes, recall a U.S. intelligence report on the 2018 murder of journalist Jamal Khashoggi in the Saudi embassy in Istanbul, Turkey. The U.S. report concluded it was ordered by Saudi Arabia’s Crown Prince Muhammad bin Salman.
Recall as well the August 2020 poisoning of Russian Opposition leader Alexei Navalny. German Chancellor Angela Merkel, among others, blamed that attempted murder directly on Vladimir Putin’s Kremlin.
There is obvious hypocrisy in the IEA’s stance, telling nations in May to stop investment in oil and natural gas “today,” only to plead with the world’s most regressive regimes in June to open up their oil taps.
But the hypocrisy matters less than the practical effect of the combined May-June declarations of the IEA if taken seriously by liberal democratic countries with substantial oil reserves.
At present, Not Free countries such as Saudi Arabia, Russia et al., account for about half the world’s oil and natural gas production. Canada and the United States and other free countries produce roughly one-third of all oil and natural gas, with Partly Free countries responsible for the remainder.
Back to Canada: Just last week, TC Energy put the final nail in pipeline coffin of Keystone XL after the Joe Biden administration pulled the permits in January. This week, it appears the federal government is musing internally about whether Canada will ever need any new oil pipelines ever again.
Anyone who thinks that the Saudis and the Russians will pay heed to the May IEA position (no more investment), even in the long-term, instead of the June plea, is naïve in the extreme. An example: Russia’s partly state-owned Rosneft is developing its US$170 billion Vostok oil project in the Arctic.
Neither IEA position—May (“kill oil and gas investment today”) or June (“Dear OPEC, please increase production”)—is in the interest of Canada, the United States, or any of our liberal democratic allies. Perhaps democratic leaders worldwide could point that out to the IEA.
Mark Milke is Executive Director of Research with the Canadian Energy Centre, an Alberta government corporation funded in part by carbon taxes. He is co-author of the report, The 2021 Tyranny Index for Oil and Gas.