If Our NAFTA Partners Can Have National Energy Programs, Why Can't We?

First, even greater instability in the Middle East, the illegal occupation of Iraq and insurgents' destruction of oil pipelines there, and recent strikes in Venezuela and Nigeria make supplies precarious. Add to instability a dwindling potential supply, because peak production was reached in most producing areas of the world some time ago. Demand, meanwhile, is rising quickly, especially in energy hungry China and India, but also in the gas-guzzling United States. Second, after 9/11, the U.S. turned toward security issues, including national security of energy supply, and away from attaining free trade and corporate rights everywhere in the world. American oil transnationals displace French, Russian and Chinese corporations in Iraq. American security trumped global trade. The U.S. NEP pledges to look after American oil and gas demand, not that of its NAFTA partners. Third, a trilateral task force for deepening economic integration in North America has been set up by the U.S. Council on Foreign Relations and the Canadian Council of Chief Executives. When former deputy prime minister John Manley, former Massachusetts governor William Weld and former Mexican finance minister Pedro Aspe are co-chairing the task force, governments will listen. The task force is likely to recommend the further erosion of Canadian sovereignty over energy supplies. Unless Canadians do something, a combination of these trends could lead to a future nightmare of "let the northern bastards freeze in the dark." How did Canada get saddled with having to continue oil and gas exporting even in times of shortage, when Mexico got exempted? In 1993, oil and gas corporations based in Canada, many of them foreign-owned, lobbied for a proportionality clause to be included in NAFTA, which was then being negotiated. Under proportionality, Canada can cut exports to the U.S. to deal with shortages, only if we cut the same proportion of supplies to Canadians. This would not help at all. Canada currently produces about 40 per cent more oil than it consumes and so should not have to worry about shortages. Yet, because of NAFTA, Canada put itself in as precarious a position as the U.S. in relying on imports of oil from offshore. Canada now exports 70 per cent of its supply to the United States and imports almost 60 per cent of the oil it consumes. The pipeline taking Western Canadian oil from Sarnia, Ont., to Montreal was reversed several years ago and now brings imports the other way. Proportionality favoured the short-term interests of exporting corporations and producing provinces, to the detriment of using Canada's raw resources to make other things, and for long-term energy security for Canadians. The Mexicans were smart and got an exemption from energy sharing in times of shortage. Look at the respect that exemption got Mexico in the U.S. national energy task force report: "Mexico will make its own sovereign decisions on the breadth, pace, and extent to which it will expand and reform its electricity and oil and gas capacities." Contrast this with the U.S. NEP report's assessment of Canada: "Canada's deregulated energy sector has become America's largest overall energy trading partner, and our leading foreign supplier of natural gas, oil and electricity." In a cold, vast country, where energy is essential for life and a functioning economy, citizens take for granted that Canadians should have first call on Canadian energy. Governments ensure Canadians have enough flu shots and expect the same regarding energy supplies. If Canada is not going to ensure security of oil and gas supply for Canadians, who is? Can we rely on the Americans? Have they secured Canadian interests regarding beef or softwood lumber? Alternatively, can we rely on the market to supply Canadians with energy when we need it? Just think of electrical power deregulation in Ontario and Alberta. A national energy policy for the U.S. and a continental energy market for Canada is a raw deal for Canada. Instead of further integration with the U.S., what about a Mexican exemption for Canada? ------------ Gordon Laxer is a professor of political economy at the University of Alberta and the director and co-founder of Parkland Institute in Edmonton. [Proofreader's note: this article was edited for spelling and typos on March 16, 2005]