Oil's not well in Canada

When a nation cannot safeguard its citizens against freezing in the dark, nor control how much energy it exports, nor set the price at which citizens can buy back their own energy from foreign transnational corporations, it is not an energy superpower, it is an energy satellite.

"A colony or satellite is a people who lose control of their resources to a foreign power," according to Gordon Laxer, political economist and director of the University of Alberta's Parkland Institute. "Canada is prohibited from using its oil to supply half its citizens during international shortages. No other country is forbidden from using domestic resources to provide for its own citizens."

As citizens of a democracy, Canadians naturally expect their own government to put them first in any and all emergencies. "What are governments for if they're not going to do that?" Laxer wonders. "I think the Canadian government wants to focus on American energy security, not Canadian, because they see their interests not as protecting Canadians, (but) as being consonant with the corporate interest..."

Oil shortage emergencies are coming. The International Energy Agency's 2008 report states the era of Peak Oil is imminent. Once the current economic crisis is over, the world will begin experiencing a unending and worsening series of oil supply shocks.

Canada, alone among major industrialized countries, has stripped itself of its energy sovereignty and now faces a succession of severe crises.

Canada has no Strategic Petroleum Reserve (SPR). It exports 65 per cent of its oil and 59 per cent of its natural gas to the U.S. In 2007, it imported 50 per cent of its oil refinery needs, including a small amount of refined oil, from the U.S. Most of those imports come from unstable Organization of Petroleum Exporting Countries (OPEC) nations such as Iraq and Algeria.

Canada's pipelines do not serve about 40 per cent of Canadians -- 92 per cent of Quebec's oil is imported, as is 75 per cent of Atlantic Canada's and 36 per cent of Ontario's. The Sarnia-to-Montreal pipeline built by the Trudeau government to carry western oil east was reversed in 1999 and now carries imported oil west. There are plans to reverse its flow again, shipping Alberta oil, not to eastern Canada, but most of it on to Portland, Me., for tanker shipment to Gulf Coast refineries.

Canada has deliberately chosen not to put the essential interests of its own people above the interests of the U.S.

Prompted by former Alberta premier Peter Lougheed and the Calgary oil patch, prime minister Brian Mulroney signed the Canada-U.S. Free Trade Agreement (now the North American Free Trade Agreement) in 1989. Its proportionality clause gives the U.S. first access to Canada's oil and gas. Even if Canadians experience shortages, Canada cannot reduce the proportion it exports to the U.S. below a moving three-year average. Canada can cut exports, but it must cut domestic usage proportionately.

Peak Oil makes the proportionality clause even more perverse. As the twin threats of climate change and oil scarcity intensify, Canadians will be doubly punished. Every unit of energy they save through conservation will go to the U.S., locking us into an ever-upward spiral of export obligation.

If Canada were not enmeshed in NAFTA, it would be self-sufficient in oil, Laxer says. And if it reduced its per-capita consumption of oil to that of Britain and France, it would not need a drop of tarsands oil.

If Canada were not caught up in NAFTA, it might still have a National Energy Board with teeth. The Mulroney government gutted the board of its regulatory powers, the most important being to ensure energy security for Canadians, including the requirement there be a 25-year surplus of gas before any exports could flow.

Today, Canada has just nine years of proven natural gas reserves and an ever-increasing amount is dedicated to extracting oil from the oilsands.

A year ago, Laxer interviewed Matt Simmons, a former fundraiser for president George W. Bush, now head of the largest oil investment bank in the world. He asked Simmons what would happen in an oil crisis.

"He said governments often don't take care of their own people well, but they sure as hell aren't going to take care of foreign citizens," Laxer says. When he inquired if Canada needed a SPR, Simmons' reply was: "Do Canadians use oil?"

In May 2007, Conservative MPs stormed out of a Commons committee meeting on Canada-U.S. energy sharing. Laxer had just posed these two questions in his testimony:

"Why is Canada discussing helping to ensure American energy security when Canada has no energy policy and neither plans nor enough pipelines to get oil to Eastern Canada during an international supply crisis?"

"Instead of guaranteeing the U.S. energy security, how about a Canadian SPP, a Secure Petroleum Plan for Canada?"

The chairman simply shut down the committee amid opposition charges of a cover-up. To date, Laxer's questions remain unanswered.

Republished from the Winnipeg Free Press print edition February 25, 2009 A13