Virgin on Business: Uh Oh, Canada!

The continuing lament of Canadians about their southern neighbors is that when Americans pay attention to them at all, it is done in patronizing cliches usually involving hockey and Mounties.

Which would be a wounding comment, were it not uncomfortably true and were we actually paying much attention to what Canadians think. If we were sufficiently moved to do so, we might explain that here in the Northwest, we have a much deeper understanding of Canada and its importance.

It is, after all, a great place to go for a weekend getaway (ah, for the days of the Canadian dollar at 67 cents U.S.). And if the loonies value vis-a-vis the U.S. dollar happens to be tipped more favorably in its direction, Canada is a great source of shoppers to fill the malls along I-5.

While some of the disparity of attention can be blamed on insularity among Americans, disparity in size also plays a role. Canadas population: 35 million. Americas: 314 million. Disparity in business importance matters, too. While Vancouver easily trumps Seattle on the spectacle scale for its combination of sea and peaks, the Seattle area carries far more clout in terms of nationally and globally influential companies headquartered locally.

But lately, there have been developments that suggest a somewhat more, um, nuanced relationship between our two countries is in the works, one in which Canadians might not care much whether Americans are paying them any heed.

Whats fueling this change is, quite literally, fuel. Canada is awash in itoil sands, shale gas, coal. Canadians cant possibly use it all, so they would like to find someone to buy it. The natural and easy market would be right across the border. But thats not working out so well. When the Canadians tried to get approval for a pipeline to move oil south, the project was swatted down in the United States with a dismissive try again later.

The Canadians did not pout and mutter unkind things about Americans. Well, maybe they did, but they also turned to their new best friends and potential customers, the Chinese.

China is not awash in energy. In fact, it has been scouring the globe to line up new sources. This situation puts the United States, and the Northwest in particular, in an interesting position. This country has natural gas it could be exporting to China. Coal, too.

The bigger question, however, is whether anyone will be allowed to build export facilities in the United States to send either commodity to China or to other customers in Asia. Fights over proposed coal export terminals in Ferndale, Longview, Coos Bay and other locations, and opposition to trains moving coal to those terminals, suggest the process will be so expensive and dragged out as to deter any construction. Ditto on proposals for liquefied natural gas (LNG) export terminals.

But the United States is not the only North American nation with a Pacific coastline. Canada already has coal export terminalsincluding one at Roberts Bank in Delta, British Columbia. And it doesnt have to be just Canadian coal going through those ports. Producers in the Powder River Basin of Montana and Wyoming are sending their coal to Asia via Canada.

Canada is also very serious about LNG export terminals, mainly around the British Columbia community of Kitimat, as well as the pipelines to get oil and natural gas there.

Energy exports will be controversial in Canada, too. But balance the enviros on one side versus the opportunity to make some serious money, generate jobs in mining, construction and shipping, strengthen economic ties to the huge market that is China and gig the Americans all at once on the other. Who do you like in that fight?

The United States may well sit out the energy export market, at least on the West Coast and especially when it involves a reviled material like coal. But unlike other times in the U.S.-Canada relationship, the Canadians have options beyond taking whatever the Americans offer, or dont. We hapless Yankees could be the ones feeling slighted and wondering, Hey, how come youre not paying attention to our not paying attention to you?

BILL VIRGIN is the founder and editor of the subscription newsletters Washington Manufacturing Alert and Pacific Northwest Rail News.