The People of America's Oil and Natural Gas Indusry

Why Pick on Canada?

Jane Van Ryan

Jane Van Ryan
Posted August 3, 2009

Why would the United States Congress snub its nose at our neighbors to the north? It's a very good question, and one that leaves us scratching our heads. Please allow me to explain.

Recently the U.S. Senate took up the defense appropriations bill, which gave it the opportunity to correct the flaws in Section 526 of the Energy Independence and Security Act of 2007. This act contains language that could prohibit federal agencies from procuring fuel from U.S. refiners that use Canadian oil sands-derived crude oil as their feedstock.

Canada is by far the biggest supplier of imported oil to the United States. More than two million barrels a day cross the border for processing into gasoline, heating oil, diesel fuel and other products used by Americans every day. About one-half of that oil is derived from Canada's abundant oil sands.

Unfortunately, the Senate amendment that would have remedied the language in Section 526 was held up by a last minute objection even though the amendment had bipartisan support.

The House passed an amendment in its version of the defense authorization bill on June 25 that would do nothing to clarify Section 526 and essentially leave it as status quo. The amendment in the House bill fails to remedy the major issue in the language--it does not make an exception for purchasing fuels "predominantly produced" from nonconventional sources.

It's not clear what "predominantly produced" means and therein lies the problem.

Let's say a military base purchases fuel that was produced in the Midwest by a refiner that gets some of its crude oil from Canada. This crude oil is mixed with other crudes being used as a feedstock. It does not have a marker to distinguish it from other crudes. Thus, once crude oil reaches a refinery and the refining process begins, it is impossible to determine what refined products have been made in whole or in part from Canadian oil sands-derived crude. In short, fuel derived from Canadian oil sands is identical to products produced from other crude oils, whether domestic or imported. As a result, the military base could be at risk of not being able to purchase the fuel it needs for its fighter jets and other equipment to ensure U.S. national, economic and energy security.

The Senate Energy and Natural Resources Committee has included in the American Clean Energy Leadership Act a bipartisan provision that is much clearer than the House amendment. API supports the Senate version of the legislation and believes that any legislation that would preclude U.S. refiners from using oil derived from Canadian oil sands would make the United States less energy secure and put thousands of U.S. jobs in jeopardy that are supported by the oil sands industry.

To see how Canadian oil sands benefit the United States, listen to the EnergyTomorrow Radio episode using the player below.