CSIS America's Program Blog
September 28, 2011
by Christopher Sands
Lawyers for the government of Saudi Arabia have sent a series of stern letters to broadcasters in Canada, warning them not to show viewers an ad put together by the Ethical Oil Institute , a Canadian NGO. The ad promotes Canadian oil as superior to Saudi oil because Canadians treat women better than Saudis.
Ethical Oil: The Case for Canada's Oil Sands is the title of a provocative 2010 book by Canadian journalist and activist Ezra Levant. Levant argues that Canada should not be sheepish in promoting its oil exports. While some Canadian oil comes from oil sands – heavy oil with grit in it that has to be steamed out prior to refining – Canada is a country with an ethical commitment to the environment and human rights, and Canadians are doing more every day to reduce the negative environmental impact of its resource industries. Not every country does this, so Canadians should be unashamed in promoting themselves, reasons Levant.
Canadian Prime Minister Stephen Harper has echoed Levant's argument in recent public statements, raising the volume on a new assertiveness among Canada's resource sector. Combined with the strong performance of the Canadian economy (based partly on strong commodity and energy prices), the ethical oil argument is part of a rebranding of Canada to the world, and especially toward Americans, that is more confident and less self-deprecating.
All these ploys just might work. Commodity prices tend to boom and bust because one unit of any commodity is the same as any other – commodities are fungible. High prices draw supply onto the market, leading prices to crash, and the resulting scarcity leads to high prices again. A proven way to beat the cycle is to differentiate your commodity from everyone else's – as "organic" produce, or Prince Edward Island mussels—to give consumers a reason to select your commodity, and pay a premium for it.
Canada is making a push to differentiate its oil, not to charge a premium, but to secure a bigger share of the U.S. market. If successful, Canada's gain will come at the expense of other suppliers – the Saudis, but also Venezuela. Canada is touting its ethical superiority to Americans, and sending a warning to rivals with poor democracy and human rights records: no more Mr. Canada Nice Guy.
Christopher Sands is a Senior Fellow at Hudson Institute.
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