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Yves-François Blanchet's words spurred an immediate response from Alberta Premier Jason Kenney.JASON FRANSON

Yves-François Blanchet’s frank message in Ottawa this week was Quebec is satiated when it comes to oil supplies, thanks, and Quebeckers want to focus on fighting climate change. Therefore there’s no reason for his province to support the movement of more oil through its territory so Alberta can gain access to international markets.

The message from Quebec politicians on these points has been consistent and shouldn’t be a surprise. But these days, Alberta politicians are not inclined to turn the other cheek. The Bloc Québécois Leader’s words spurred an immediate response from Alberta Premier Jason Kenney during his presentation Wednesday to a room full of Western Canada oil drillers – a group whose business activity has dropped to near 30-year lows.

To great applause, the Alberta Premier said Mr. Blanchet is wrong to snub his nose at Canadian oil while Quebec accepts billions of dollars in equalization payments from Ottawa, when a significant part of those federal funds stem from activity related to the West’s fossil fuel sector.

However, a step removed from the political fight, a business story this week served as a reminder that if there’s a profit to be made, international energy markets will try to find a way.

The news was that Repsol SA is looking to use its Canadian oil for its European refineries amid lower supplies from Mexico and Venezuela. According to a report from Bloomberg, the Madrid-based company is considering using rail to transport as much as half-a-million barrels of heavy crude each month from Alberta to Montreal – or maybe New Jersey – before loading it onto tankers bound for Europe.

Oil from Western Canada rarely is transported to Europe. Repsol, which has offices in Calgary and conventional heavy oil projects in Western Canada but no oil sands operations, would be breaking ground if this plan actually went ahead. But the reason why it’s even a talking point is because oil prices are low enough in Western Canada that it might make economic sense to transport product 3,500 kilometres across the continent by train, load it onto tankers at the Port of Montreal and then ship it across the Atlantic Ocean for processing in European refineries.

Why is oil from Western Canada discounted relative to other types of oil in the world? In part it’s because the heavy oil Alberta is known for needs a lot more processing and refining to be of any use. But it’s also because Canadian oil producers are far away from key markets in the United States or around the globe, pipelines are jammed, transportation costs are higher, Canadian oil is limited in that it can only be marketed to a select group of refineries and production in Western Canada is still increasing.

U.S. oil production is also surging. With North America awash with crude, and where producers seek a run-around pipeline construction delays, strange things happen in oil markets. Mississippi River barges are being used to move American oil. The U.S. is now shipping staggering amounts of oil to all the corners of the Earth – whereas five years ago it exported almost no crude. And in Canada, oil producers with burgeoning supplies are forced to export its increasing production by rail, to the tune of more than 300,000 barrels a day.

RBC energy strategist Michael Tran says global oil markets are not set in stone, and “we’re consistently rewriting the rules of the global oil trade, in real time."

“It’s not the path of least resistance, it’s the path of the most favourable economics.”

Favourable economics has also paved a way for the interprovincial movement of Alberta oil to Quebec in recent years.

In 2012, Quebec got less than 1 per cent of its oil from Western Canada. More than 90 per cent of its supply came from Algeria, Kazakhstan and Angola, according to National Bank of Canada.

But in 2015, Enbridge Inc. was given permission to reverse its Line 9, substantially increasing the amount of light and heavy oil from Alberta that ends up in Quebec. In fact, the province got about 44 per cent of its oil from the western part of the country in 2018. U.S. oil destined for Quebec moves on Line 9, as well.

Quebec has the second-largest refining capacity in Canada after Alberta, and the province consumes about one-fifth of the country’s gasoline. Maybe instead of fighting, Alberta politicians could be thanking Quebec for being a good customer.

And in turn, Quebec could thank Alberta for a plentiful supply of cheaper oil that has helped keep gasoline prices from increasing as much as they might have if the province was still relying on overseas suppliers to feed its refineries.

To be clear, Quebec politicians are not saying no to Alberta oil. They are saying no to Alberta shipping oil through the province to get to international markets.

And on that key point of difference, watch for Mr. Kenney to keep fighting, and for oil markets to keep evolving.

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