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Cramer: What About Oil from Canada?

Jim Cramer

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How do people think we are going to get our imported energy? Do they not realize that we either get the excess supply from Canada or we import it from Venezuela or the Middle East?

Last night I had Enbridge ENB CEO Al Monaco on the show. Enbridge is the premier growth pipeline company in North America, with expected earnings-per-share growth of 10-12%  over the next five years, a remarkable number for a company that transports oil and gas. That growth will allow it to give you a predictable 13% increase in dividends for that period. Given the company's track record of giving you a total shareholder return of 20% return over the past five years vs. a 1% return for the S&P Toronto index, that promise of dividend growth seems very realistic.

During that period, Enbridge expects to spend $36 billion building out pipelines from all of the new shales as well as from hard-to-reach Canadian oil fields, of which $26 billion has secured funding. Right now it is working $4 billion in pipeline projects.

That makes Enbridge among the largest employers in the United States and, when you consider all the ancillary jobs created by laying down pipelines, this Canadian company may be the largest single current hirer in the country. In fact, it's a jobs machine.

I see only one risk to this terrific growth story: the environmental opposition to both the creation of new pipelines and to the kind oil, so-called dirty oil, that Canada produces. I see this risk because Enbridge pointed it out for us on its terrific two-day analyst presentation. They did it on a terrific slide called the energy dilemma where they contrasted the need for energy with the vocal opposition to what they do. This despite industry-wide recognition as the best in class in system safety and reliability.

But the company did have a pipeline rupture in July of 2010 that caused 843,000 gallons of crude to pollute the Kalamazoo river, a beautiful stretch of water that's a tributary to Lake Michigan.

That was terrible. It basically defined the pipeline business in North America and has been the poster child for all that's wrong with pipelines. I think it is Exhibit A against Keystone.

Given that environmental destruction, and it was undeniably destructive, there is tremendous political resistance to this method of transport. So what's happened? It's not like we are keeping the 6-7% oil growth in this country in the ground. We're just shipping it differently, mostly by rail. But there is so much of the stuff that it is likely that we will have to send the so-called dirty oil from Canada overseas.

Despite the bountiful new supplies of energy we are still importing 6 million barrels a day from non-North American sources. Where does that come from? The big three: Saudi Arabia, which is responsible for 13% of our imports, Venezuela, 9%, and Russia, 5%, according to the latest bulletin from the Energy Information Administration.

Without political resistance, it is possible that in a couple of years' time we couId be all North America. Right now we are helping to prop up two regimes that I think most Americans would regard as our actual ENEMIES, Venezuela and Russia, particularly over the Syrian issue, and Saudi Arabia, which makes us hostage to any shutdown from any antagonistic regime in the Middle East tinderbox.

So the choice is clear: create more jobs and make us energy secure vs. the oil spills that pipelines, by far the most efficient and most lasting and arguably, given several recent oil train accidents including one that killed five people in Quebec, the most efficient and safest way to transport oil.

Yet, the political opposition to these initiatives is incredible. We would rather buck up enemy regimes and create almost no jobs than risk these pipelines. To me it is an incredible gap in common sense, but it is only increasing.

Now I still believe Enbridge will hit the numbers. But the bigger issue is how come no one, not even the military, is making the case for bringing in oil from Canada vs. importing oil from these rogue countries. Some complain that we would be bringing in so-called dirty oil from Canada, but we have ample refinery capacity to make it this oil as clean as that foreign oil from Russia, Venezuela and Saudi Arabia, particularly with the new energy technology from Honeywell HON .

So, it happens much more slowly than it should and we help prop up these regimes, all because we would rather take oil from overseas than risk another oil spill.

This is the kind of logic that prevails right now, a non-debatable issue because any politician who makes the case for jobs and energy security seems to be a target of campaigns by environmentalists.

All I ask is why isn't it weighed? Why don't we at least have the discussion?

Again, either way, Enbridge remains a terrific, consistent growth vehicle.

I just think it's too bad that no one has the guts to talk about jobs created and energy self-sufficiency vs. helping Venezuela and Russia and reliance on the dangerous Middle East.