No doubt Prime Minister Stephen Harper and his supporters in the oilpatch were raising glasses of elderberry juice last night after the Europe Union declared it was abandoning a plan to officially label oilsands oil as "dirty."

Besides being a public relations victory, however, Canadian oilsands producers did not win much. There are ways to reduce oilsands production, but name calling isn't one of them.

Most important, the current geopolitical situation helped the Europeans realize that blocking Canadian oil might have had a very bad effect. On Europeans.

"It is no secret that our initial proposal could not go through due to resistance faced in some member states," EU climate commissioner Connie Hedegaard said in a statement. 

Britain's BP and Holland's Shell, with their own stakes in the oilsands, would certainly have made their feelings known to their respective governments. But the current political dispute with Russia also helped to concentrate European minds.

Continental disputes have been good for Canada's exports in the past. When Napoleon blockaded continental trade in the early 1800s, Britain turned to Canada to replace the timber it used to get from the Baltic. That launched the Canadian square timber trade, which became such an efficient business that it didn't stop when the Baltic embargo was lifted.

Trade restrictions, this time with Russia, could have a similar effect now. Western Europeans want to discipline Moscow for its adventures in Ukraine, but those countries know they are dependent on Russia for energy. 

As of 2009 the European Commission calculated that about a third of all its imported oil and 40 per cent of all natural gas came from Russia. The flows have not been cut off yet. But what if the situation worsens? Meanwhile, ISIS threatens stability in Europe's other regional energy source.

Strategically, Europe would be unwise to discourage supplies from Canada. Cutting off supplies from here has much more potential to hurt Europe than to hurt Canadian producers, without having any important effect on oilsands production. 

Can you tell oilsands oil from the other stuff?

The reason is something called "fungibility."

Once it has been refined from bitumen into oil, the products of Western Canadian oilsands become fungible. That is a short but fancy way of saying one unit is indistinguishable from any other unit. 

Like U.S. dollars, gold and electricity, no matter what their source, you use fungible goods in just the same way. If Europe blocks Canadian oil, Canadian oil will just go someplace else — say China — and the oil that would have otherwise gone to China would then go to Europe. 

Except for a few possible inefficiencies in transportation, which would only serve to make the oil more carbon-intensive, the European label would have little effect on producers.

The EU Climate Commission's plan to label Canadian crude has been nothing but a wasteful public relations ploy.

However, if Europe really wants to block dirty crude, there is a much more effective way.

Despite its fungibility, dirty oil does have a label of sorts. And that label is its price. "Light sweet crude" pumped straight out of the ground in Texas and straight into a nearby refinery for export may be worth about $90 US a barrel, and turns a good profit.

Other sources of oil are not as profitable. The further you get from a coastal refinery, the more expensive it is to extract and the harder it is to refine into fungible oil, the less it earns. 

This week, Suncor's first heavy crude destined for Europe travelled by rail to Quebec to be loaded on a tanker, an expensive way of shipping raw material. Earlier this year, the Spanish company Repsol sent some Canadian "tarsands" crude to Europe as part of a pilot project. But if world oil prices stay low, that is not likely to continue.

Low oil prices discourage production

According to a Bloomberg report earlier this year, Canadian oilsands producers are the biggest losers when oil prices fall, "needing crude prices as high as $150 a barrel to turn a profit."  

Many Canadian operators would dispute those figures, but it is certain that as world oil prices fall, oilsands ventures — especially new ones — become less worthwhile.

So if Europe wants to reduce oilsands production, name calling may not be the best option. Instead it must put even more effort into things that will reduce oil demand and keep prices low.

According to the financial company Lazard, solar and wind power are already as cheap as energy from fossil fuels in many markets. By creating and promoting those technologies for use around the world, Europe can have a direct effect on oilsands production.

Using energy more efficiently, insulating buildings, using electric cars, making alternative power cheaper and more efficient are all ways to wean the world off oil. And as oil prices fall, it will be the most expensive crude — whether from the oilsands, from the deep offshore or from the North — that will go out of production first.

But if European oil demand keeps rising, helping to push world prices up to $200 and beyond as some have predicted, calling the oilsands names will do little to stop Canadian production.