The Fraser Institute

The Fraser Institute

May 28, 2013 06:32 ET

The Fraser Institute: Canada Lags United States in Energy Security; Pipelines, Access to New Energy Markets Key to Prosperity

CALGARY, ALBERTA--(Marketwired - May 28, 2013) - Canada's energy security ranking has fallen below that of the United States and may continue to drop unless Canada is able to access new energy markets abroad, argues a new study from the Fraser Institute, an independent, non-partisan Canadian public policy think-tank.

"For Canada, 'energy security' equates to free participation in global energy markets, and capturing the economic benefits of increased energy development," said Kenneth P. Green, Fraser Institute senior director, energy and natural resources and co-author of Risks to Canada's Energy Security.

"Today, the greatest risks to Canadian energy security are a by-product of U.S. policy, which has led to vastly higher U.S. production of oil and natural gas and decreasing gasoline consumption, stifling demand for Canadian petroleum products. The resistance to Keystone XL also poses a challenge for future pipeline projects, which are critical for moving Canadian energy to market."

Risks to Canada's Energy Security examines how the notion of "energy security" differs between Canada and the United States. The study also analyzes the results of the U.S. Chamber of Commerce Institute for 21st Century Energy's 2012 International Index of Energy Security Risk, which compares the energy endowments, trade, and risk policy factors of 25 large energy-consuming countries from 1980 to 2010.

According to the International Index of Energy Security Risk, Canada ranks eighth in the world for energy security, with a score very close to the OECD average, and comes in one spot below the United States. Canada's score is down from that of 2009, when it ranked seventh overall.

"The development of Canada's oilsands coupled with U.S. unconventional oil and gas production is shifting the world's energy center of gravity from the Middle East to North America," Green said.

"But for Canada to realize the economic benefits of increased energy development, we must be able to access diverse markets. Pipeline projects like Keystone XL and Northern Gateway are a critical piece of that."

Like Canada, the United States energy security ranking tends to track quite closely with that of the OECD average, though the U.S. has comparatively lower energy costs than the OECD, an advantage that is growing over time as the U.S. enjoys massive increases in energy production that are reducing the costs of electricity generation.

"The U.S. strengths are seen in its growing production of oil and natural gas, its vast reserves of coal, as well as ongoing reductions in gasoline consumption due to the use of domestic biofuels," Green said.

"It is hard to overemphasize the impact the revolution in shale oil and gas is having on U.S. energy security."

The report argues that the energy security of one country is inextricably linked to energy security abroad. For example, in the 1990s the growth in oil reserves reported in Iran, Iraq, Saudi Arabia, and Venezuela led to sharply rising supply risks. The large drop in risk reported in 2003 is almost entirely due to the addition of 175 billion barrels of Canadian oil.

"Clearly, Canada's energy potential is enormous. But we need new infrastructure to transport our energy to diverse markets, bringing immeasurable economic benefits to all Canadians," Green said.

Follow the Fraser Institute on Twitter

Like us on Facebook

The Fraser Institute is an independent Canadian public policy research and educational organization with offices in Vancouver, Calgary, Toronto, and Montreal and ties to a global network of 86 think-tanks. Its mission is to measure, study, and communicate the impact of competitive markets and government intervention on the welfare of individuals. To protect the Institute's independence, it does not accept grants from governments or contracts for research. Visit

Contact Information