Land of hydro also needs a lot of oil

According to a recent CIBC report, oil revenues in Canada will be $15 billion a year lower than they could be in coming years due to pipeline and production bottlenecks.

Meanwhile, Quebec imported crude oil mostly from other countries to the tune of $13.7 billion in 2012, making it its top import. The two main sources of Quebec's oil are Algeria at 28% and the United Kingdom at 16%. Only 12% comes from the Atlantic provinces. None comes from Western Canada.

Given this situation, new proposals to ship oil from west to east should be welcomed by all. In addition to Enbridge's plan to reverse the flow of its pipeline between Montreal and Sarnia, TransCanada recently confirmed plans to convert its natural gas mainline and extend it to carry oil from Alberta to Quebec and New Brunswick.

The Quebec government has shown openness to these plans, but environmental groups such as Equiterre, which has proposed a series of measures to "liberate" us from the use of oil by 2030, carry a lot of weight in the province. And they can count on Quebecers' relative ignorance of the oil industry and on a historical narrative that favours renewable energy.

After all, with its huge James Bay complex, isn't Quebec the promised land of hydroelectricity? The province by itself is the world's fourth largest producer of hydroelectricity, after China, Brazil, and the United States.

Quebecers are also huge per capita consumers of electricity, coming in second in the world only behind Icelanders. Unsurprisingly, electricity — almost all of it being hydroelectricity — is the most-used form of energy in Quebec, at 40% of the total.

But guess what? Oil products come in second place, at 39%.

In comparison, Canada as a whole consumes far more oil products (41%) and natural gas (31%) than electricity (24%). But that doesn't mean Quebecers can dispense with oil, far from it.

Moreover, although oil consumption has fallen slightly in recent years, other forms of energy, including electricity, have gone down even faster. So, it's very possible that oil will soon become predominant in Quebec too, as it is in the rest of the country.F

orget the pie-in-the-sky plans to electrify the whole transport grid. Quebec will still need oil, and a lot of it, in 2030. And it would be advantageous to everyone if was in on the plan to buy it from Alberta and Saskatchewan.

Michel Kelly-Gagnon is President and CEO of the Montreal Economic Institute. The views reflected in this column are his own.
* This column appears in Sun Media newspapers, published both in several of Canada's key urban markets (Toronto, Ottawa, Calgary, Edmonton, Winnipeg and London) and in its 28 community dailies.

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