The plan is . . . there is no plan
Oil disruptions are becoming a fact of life: how does Canada survive one?
by Dan Crawford <dcrawford@republic-news.org>
Canada is one of the world's last resource rich countries. We have an abundant endowment in fresh water supplies, mineral resources, oil and gas, forests and rich farmland. Our population base remains small and supportable. Everything seems to be going just fine. That is until our trade agreements are reviewed and the question arises of what kind of strategy for the future we have. In doing this review, a giant sucking sound can be heard coming from the belly of the US, greedily consuming as much of our raw resources as it can and as quickly as possible.
The US Department of Energy web site reveals part of the story. They provide a country analysis on Canada stating that "Of the crude oil Canada exports, 99% of it goes to the United States. Canada is the single largest import component of US crude oil imports."
In 2004, 68% of all crude oil produced in Canada was exported to the US. Also, all of Canada's natural gas exports went to the United States. In 2003, Canada supplied the US with 16% of their overall natural gas consumption. This accounted for more than 55% of the natural gas production in Canada. Since 1996 Canadian natural gas reserves have been depleted by 13.3% and at current rates will be completely exhausted within 8.6 years.
The next part of the story is revealed by looking at Canada's NAFTA agreement with the States in relation to energy supplies. Our country has signed on to a number of extraordinary clauses that benefit only the United States: National treatment rules where foreign corporations are treated as being Canadian corporations; Complete opening of the energy sector to foreign corporations; prohibition of preferential pricing for Canadian industries; elimination of export limits and taxes; abolishment of Canada's 25-year vital supply safeguard; a “Proportional Sharing” agreement whereby Canada must guarantee current export levels to the US. Should the levels decrease, then Canada's production and consumption levels must decrease by the same proportion.
The most obvious question is how could Canada, a country that provides such a vital part of the US energy equation, have allowed itself to sign such a bad deal. In comparison, Mexico refused to sign similar clauses with the US, electing instead to secure energy sovereignty for their own country over and above appeasing the wishes of the world's super power.
The proportional sharing clause needs further explanation. The Canadian federal government is prohibited from reducing the proportion of production that is exported below the level set over the preceding 36 months. This means that Canada has lost all control over what amount and what buyers it can sell its own energy to. Instead of enjoying the leverage and benefits of being the key energy supplier to a country, Canada has effectively tied its hands, rolled over and graciously submitted control to the US.
More questions arise over the recent increase in our export production proportion to help offset the shortages caused by the hurricanes. No one has mentioned if this new proportion will be a part of the 36-month calculation. If it isn't, exactly how will the calculation be done? Again, no answers.
A recently published report from the Parkland Institute in Calgary goes into great detail about NAFTA and our relationship with the States. The report is titled “Back to the Hewers of Wood and Drawers of Water: Energy, Trade and the Demise of Petrochemicals in Alberta” and the document can be found at ualberta.ca/~parkland/
Two exceptional quotes from it are:
"The compromise of Canada's energy security has not secured access to US markets, as the BSE and softwood lumber fiascos illustrate, making the purpose of further compromises questionable."
"The US's unwillingness to respect NAFTA's rules opens the door for Canada to exit the agreement. The time is right for Canada to take action to regain energy sovereignty and shift its economic relationship with the US onto more balanced terms."
This report was released on October 5th. Two days later Prime Minister Paul Martin made these statements as documented in a CBC article “PM says softwood feud could imperil other trade fronts”:
"We have to recognize that NAFTA is a framework, not just for the trade of commodities, but for the trade of most goods and services. And for this to operate reliably we have to rely on the dispute settlement mechanism."
Martin warned the US that the ongoing lumber dispute is impairing Canada-US relations, and could imperil trade on other fronts, including US access to Canadian energy supplies.
He said the US government has undermined the dispute-settlement mechanism in the free trade agreement, the same mechanism, he noted, that governs trade in energy. The US is increasingly reliant on Canadian energy sources, which tend to be taken for granted south of the border.
It would seem that either the PM took some notes from the Parkland's report or he is taking personal lesson's from the President of Iran on how to wield the Oil Weapon. Either way he is acutely aware that a federal election is close at hand and now is the opportune time to conduct himself as a leader.
One last revelation to this story is the fact that we as a country continue to grow the production and consumption of our non-renewable resources while quickly depleting their finite reserves and we are doing this without giving any thought or concern to our future.
This is acutely revealed by the fact that there is no public plan for Canada's citizens on how the government would react to an oil disruption let alone a dwindling supply of energy. I spoke with a public servant in the media relations department at Natural Resources Canada on this subject. He assured me that there is no plan because "its impossible." I asked if it's impossible due to the complexity of implementing such a plan. His response: "No, its impossible because a disruption could never happen"
Conducting more research I found the Energy Supplies Emergency Act at this government site:
laws.justice.gc.ca/en/E-9/ It is a plan but with a sole focus on the economy, as the document states: "An act to provide a means to conserve the supplies of energy within Canada during periods of national emergency caused by shortages or market disturbances affecting the national security and welfare of the economic stability of Canada"
The act is then divided into four sections:
i) Mandatory Allocation of Supplies
ii) Rationing of Controlled Products
iii) General and Administration
iv) Other provisions
Readily apparent is the nonexistent section on conservation. It would seem logical that any responsible government would supply a clear plan on how to collectively employ conservation measures, especially in the face of an emergency. In such an event prior logistics planning would make an incredible difference in reducing the mass chaos panic stockpiling and other irrational behavior it would cause. This point is driven home in a guidebook issued by the International Energy Agency titled “Saving Oil in a Hurry,” a reference I have made mention of before in a prior article. The executive summary is freely available at their site.
As it stands now, there is no plan. This comes straight from the people who should know, Natural Resources Canada, the very department with intimate knowledge concerning the state of Canada's energy supplies.
As a Canadian citizen I have lost all confidence in our government and it's support structures. We are on our own, that is the only plan.
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