Happy back to school!
I was a teacher for 11 years, so September still feels a little more like the beginning of a new year to me than January. It also seems like a good time to start this.
Every week, I’ll give you a quick hit of what had my attention last week, what I think matters about it, and a question or two that might help you join the conversation.
You don’t need to know everything, just enough.
WHAT HAD MY ATTENTION
Canada has leverage. What should we do with it?
The latest Canada-U.S. trade negotiations have Canadians talking again about one of our biggest bargaining chips: energy.
A few things to know:
• Canada is hitting back. Starting this week, Canada imposed tariffs on $27.6 billion of American goods.
• There are calls to go further. That includes using Canadian energy exports as leverage against the Americans.
• But our reliability has value too. The world is getting less stable, not more. Countries are looking for secure supplies of oil, natural gas, uranium, fertilizer, critical minerals, food and a lot of other things Canada happens to have.
That last one is what has my attention.
Canada absolutely has leverage. But having leverage and using it wisely aren’t necessarily the same thing in an increasingly unstable world where trust is at a premium.
Canada has an enormous opportunity to become a supplier of choice for the things the world needs. I’m not sure it makes sense to simultaneously tell those customers we’re willing to cut them off when we don’t get our way.
MY SMART ENOUGH TAKE:
Maybe the smartest way to use our resource leverage is to become very difficult to replace.
THE SMART ENOUGH QUESTION:
Does threatening to use your leverage make it stronger, or eventually make people find a way around you?
WORTH YOUR TIME:
A good argument from Heather Exner-Pirot on why Canada’s resources may be more valuable as carrots than sticks.
CHECK OUT HEATHER’S ARTICLE HERE
Don’t panic about Venezuela.
But definitely pay attention.
The U.S. just announced an extraordinary deal involving 17 Venezuelan oilfields and 65 billion barrels of recoverable oil, 65 billion barrels is a very big number.
It’s also not the number I’d pay the most attention to.
Venezuela isn’t suddenly putting 65 billion barrels of oil onto the market. Getting production back requires enormous investment, infrastructure and time.
And Rory Johnston’s analysis is reassuring for Canada in an important way: Venezuelan heavy oil creates competition for some Canadian barrels, particularly on the Gulf Coast, but replacing deeply integrated Canadian supply into the U.S. Midwest is another thing entirely, so no, Venezuela isn’t replacing Canadian oil next week.
But I am paying attention.
Because the U.S. is trying to give itself more options, more supply, more control. Less vulnerability when the world gets messy, Canada should probably be doing the same thing as TMX gave Canadian oil producers another customer. LNG Canada gave Canadian natural gas access to a global market.
The lesson for me isn’t that we need the Americans to depend on us, it’s that we shouldn’t depend entirely on them either.
MY SMART ENOUGH TAKE:
Our biggest customer is looking for more options. Good reminder to keep building ours.
THE SMART ENOUGH QUESTION:
If your biggest customer is looking for another supplier, shouldn’t you be looking for another customer?
WORTH YOUR TIME:
Rory Johnston’s Look at where Venezuelan heavy oil can actually compete with Canadian barrels, Nerdier than most things I’ll send you, but worth it.
WHAT I’M WATCHING
SHOW ME THE MONEY.
Canada’s first Investment Summit happens in Toronto September 14 and 15, the ambition is enormous: catalyze $1 trillion in investment over five years, I’ll be watching less for what gets said on stage and more for three things:
Who comes?
What do they actually want to invest in?
And six months from now, did anything get built?
Canada has no shortage of potential. I’m interested in who’s willing to put money behind it, but more on that next week.
SMART ENOUGH IN 60 SECONDS
Should Canada use energy as leverage against the U.S.?
I’ve been getting this question a lot lately.
My answer isn’t that Canada doesn’t have leverage.
It’s that we should think pretty carefully about what happens after we use it.
ONE LYNNIE THOUGHT
Since it’s back-to-school week…
I don’t think the most important thing kids can learn this year is another fact, they can find facts in about three seconds now. So can the rest of us.
The useful skill is learning to take in information from different sources and people with actual expertise, question it without blindly agreeing or automatically fighting it, decide what makes sense, and change your thinking when you learn something new.
That’s how science is supposed to work.
Actually, forget the kids.
Might be a pretty good assignment for the rest of us too.
See you next Week!
Lynn