Canada imports oil while battling over pipeline exports

Proposals to build new pipelines to carry oilsands crude to the United States, or through British Columbia for export to Asia, have sparked political battles between environmentalists and politicians on both sides of the border.

But the debates have alsofocused attention on how Canada uses the oil that ithas.

Canadaexports about two-thirds of its oil to the United States while half of the oil used in Canada is imported from other countries.

Western Canada is self-sufficient, supplying its own oil before exporting the rest. But Eastern Canada relies on imported oil despite the fact that some provinces are oil producers.

There are several offshore drilling operations in Newfoundland and Labrador, but none of the oil is actually used in Canada. Theeastern provinces rely on an oil supply that's imported from Saudi Arabia, Africa and Venezuela.

Oil sent to U.S. for processing

Ontario's oil comes from Western Canada, but it is sent first to the United States to be refined before being delivered to the province.

Professionals in the pipeline industry point to lower costs as the reason behind this system. Though it may seem counterintuitive, some say that it is actually much cheaper to use imported oil, since it costs less than it would to move our own oil across the country.

Brenda Kenny, president of the Canadian Energy Pipelines Association, said that using imported oil eliminates certain costs.

"Far and away the factors are securities and costs," she said. "Ultimately it's the pocket books of consumers and that's a key concern for us to keep it low."

But the system has its critics, including Gordon Laxer, who is co-director of the Parkland Institute, a research organization at the University of Alberta. He is writing a book on the subject and said that the current system leaves Canadians vulnerable.

"No one is talking about supplying Canadians with their own oil," he said. "It doesn't make sense to me."

In an interview with CBC chief correspondent Peter Mansbridge last week, Prime Minister Stephen Harper said he was content to let the market decide how and where the oil flows in Canada.

"The fundamental basis of our energy policy in this country is essentially market driven," Harper said."As a market-driven supplier, we're now the only in the developed world and in the stable world we're really the only supplier that is secure and is increasing its production. So I think it's served the country well."

"It's served government revenues well. It's served creation of jobs well. But it is fundamentally a market-based decision. We don't dictate pipelines go here or there," he said.