Liberal Senator Mike Duffy raised the question in his role as finance committee chair. Mr. Duffy argued Mr. Biden’s statement was inconsistent with what he told the committee in his role as a senator. And he made a point that should have gone right over the heads of President Trump and Mr. Biden: that Ottawa was supposed to invest some of the savings it accrued under the North American Free Trade Agreement to alleviate the oil price discount and “make sure these guys keep their subsidy” – subsidies to the producers of Canadian oil.
The 2016 Senator Duffy quotes from Mr. Biden’s testimony to the Finance Committee does not refute the existence of a “partnership” to keep US producers sweetened. However, the language of this memorandum, penned by Mr. Biden’s chief of staff, Jim Messina, does. It references “our oil and gas companies” as “vital partners to us in our energy production”. The language also goes on to praise the Canadian oil producers and is more frequent and coded than Mr. Biden’s quotes.
The language is not inconsistent. Rather, it is consistent with why Canada’s energy sector partners with Washington: the subsidies they receive are not part of general tax financing or fixed payment. Rather, they have to be paid back over time, depending on how much oil is sold at what price, and the amount of profits they make. The US’s recent “tax holiday” for oil producing states, for example, must be repaid within a certain time frame – similar to what the oil producers of the former Soviet Union had to repay under the oil price support programme.
“We owe the oil companies”, Mr. Biden says. “We are owed a dividend. As the price rises, you deserve to pay more back”.
Given that the US has “specific business relationships with all the producers of American oil and gas, to the greatest extent possible, within the government guidelines”, such a policy flows logically into a subsidy policy on American oil. And, in fact, it’s not to some extreme that it matters whether the subsidy goes to the US producers, to the US producers’ state partners or to Canadian producers. It’s to all of them – and all parties – that the policy benefits – that they are the most important recipients. And the value of the policy flows proportionately from how much of the benefit flows from whichever party receives the most.
The logic of the statement “We owe the oil companies” is clear. To recover the cost of the subsidy, the US government has to pay some portion of the benefit. If it pays more back to the oil producers than they’ve received in their own cap-and-trade premiums, then the US would not be able to pay more back to its investors.
This is not to say Mr. Biden is inconsistent on the subsidy policy. It’s simply to say his statements are consistent with what this past administration is describing as the policy.