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Oil's not well in Canada

By: Frances Russell

25/02/2009 1:00 AM | Comments: 6

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

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6 Commentscomment icon

Generally the provinces sell rights to resources on a license and royalty basis. The buyers extract the resource and sell to the highest bidder. Eastern Canada, in the case of western oil, usually is not the highest bidder because they would rather buy offshore oil at a lower price. I'm not an expert on NAFTA, but I haven't heard provinces complaining about it in regard to selling their oil. The reason I bring Manitoba Hydro into the discussion is that it is a very similar situation. There are the owners of the resources and others taking these resources for their own enrichment without offering fair compensation. Yes, there is poverty in oil country and a lack of Canadian ownership. NEP was a big contributor to these problems, not a solution.

If the provinces own the oil then we should be asking why Mulroney could mandate who they can sell this oil to? Bringing Manitoba Hydro into this discussion on oil is another issue altogether. Are you trying to indicate to us that there is no poverty in oil country?

Re: Yamahammer. You totally ignore that oil belongs to the province, just like you ignore that it's not Manitoba Hydro's water in northern Manitoba. What else are you wanting to steal?

" The East wants to buy cheap oil on the world market." That remark is baseless and pure folly. As far as Trudeau and the NEP, the government of the time reacted to protect the security and sovereignty of Canadians. To keep crying over what Trudeau "did" is simply crying over a small glass of spilled milk. I would rather suggest that we as a nation should be sobbing uncontrollably over the large vat of spilled milk that Mulroney and his successors have toppled and by which have sold our sovereignty and security to the big oil interests down south. It is now not a case of "taking" western oil but one of giving it away to a foreign nation and it's corporate thief's.

Who is going to build a pipeline? The East wants to buy cheap oil on the world market. Any projects in the past for pipelines to ensure Eastern supply, are now seen in revisionist history as subsidies to western energy. I agree that Canada should reduce its per-capita consumption of oil to that of Britain and France, and, like Britain and France, the way to do this is by nuclear power generation. According to the constitution, the provinces, not the federal government, own the oil. Trudeau didn't hesitate to take oil from the provinces and let the people in the West freeze in the dark. The financial ruin that these Canadians suffered cannot be forgotten. Currently there is a similar situation in Manitoba where Manitoba Hydro is taking native owned water for power generation. The people of southern Manitoba enjoy cheap electricity but the rightful owners of the resource receive no compensation and live in poverty.

How and why have Canadians given up their birthright and sovereignty? Why are we not intelligent enough to realize that a National Energy Policy is essential to a nation's well-being? Why do we keep doing it? How and why have we developed this huge,seemingly insurmountable need to curry favor with the US, and pit region against region in a desperate bid to destroy our country? Frances Russell has tried time and again to wake us up. And, in the meantime, I can't sleep at night because I am so angry at our politicians and us.

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