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S. A. Shelley: For many years, OWOE writers have advocated for a North American Energy Alliance (NAEA) to ensure robust energy supplies at reasonable costs and with minimal geopolitical risk. This idea has started to catch. Some commentators have recognized that "Energy is the lifeblood of all nations, but it has become a weapon in the hands of Russia and Iran." (Diane Francis: How to turn Canada into an energy superpower). While other analysts have commented that the U.S. and Canada are being economically defeated by China and thus should focus on developing a unified economic response, including energy to overcome the challenge from China (Canada at Economic War: Being Outplayed by Beijing).
According to the Institute for Energy Research (2024 North American Energy Inventory) and the EIA (Country Analysis Brief: Canada), North America holds a significant share of the world's oil and gas reserves, though the exact percentage depends on whether you're looking at proved reserves or technically recoverable resources. Considering proved reserves the volumes are staggering:
Oil Reserves
Combined, North America holds 14% of the world’s proved oil reserves.
Natural Gas Reserves
North America holds a substantial portion of the world's gas, enough to provide a century of supply at current consumption rates. While North America may not dominate the global reserve charts like the Middle East, it's a powerhouse in production and has vast untapped shale and unconventional resources.
These proved reserves, along with ever growing production (US oil and gas production hit record high in December) allows the US to shrug off any impact on oil flows that may arise from the Iran - Israeli war. Europe, Japan and Korea, those allied technology powerhouses, are far more vulnerable to energy supply volatility from the Middle East. After the Middle East, there is Russia, but since 2022, that has also been a politically toxic supplier.
Thus, if North America can get its act together, it can become an energy superpower and supplier to all friendly, like minded, allied nations that are otherwise dependent upon dictators of various kinds and devious motivations.
Regrettably, when it comes to oil supply to the global markets, the U.S. is probably near its maximum production capacity and Mexico is just holding on. This leaves Canada, and production in Canada can be ramped up quickly. Unfortunately, getting additional production to overseas markets is a big problem. As one analyst summarized:
Canada is notorious for its red tape in the energy industry. Several consecutive liberal governments have done their best to stifle the industry with ever more environmental requirements that have added to producers' costs and made it more difficult for them to do business overall. (Can Canada Replace Russia as an Oil and Gas Superpower?)
In terms of supplying the world with Natural Gas, here, the U.S. is at the forefront. Since having become the world's largest exporter of LNG in 2023 (The United States was the world's largest liquefied natural gas exporter in 2023), U.S. LNG has stabilized Europe and Asia as Russian gas has become unavailable. And again, Canada, though celebrating its first ever shipment of LNG (First Cargo Puts Canada on the Map of LNG Exporting Nations), is lagging far behind its economic potential and far behind the U.S. (North America's LNG export capacity is on track to more than double by 2028 and Figure 1).
While OWOE is also very much in favour of green energy and green technologies, we also recognize that the world will still need a lot of conventional energy, and it would be better for those energy dollars to be spent in North America instead of in Russia, Iran and Venezuela.
But this is not all that North America can offer the world, and in the next blog we'll examine minerals, especially those critical to a modern and clean energy economy.
Until the next blog, let's hope that someone will Shut Down Line 5!
