Harper May Slip on Gas
On the horizon: $100-a-barrel oil. While supply is still almost able to meet demand, that must end. This makes oil that is expensive to extract and deliver, such as Alberta tar sands, look attractive. And it is why Canada and B.C. will permit oil and gas exploration off the Queen Charlottes.
This is also why George Bush is in Iraq and is spoiling for a fight with Iran.
High oil prices will have a huge, adverse impact on Ontario, while creating a huge windfall for Alberta, which isn't at all interested in giving a break to Ontario industry, already in trouble with the rising Canadian dollar and the ravages of globalization.
We've seen this movie before. Back in the '70s oil costs suddenly soared under the friendly eyes of Sheikh Yamani and the OPEC cartel, which brought about this bit of irony. When the world oil market went in the dumper in the '60s, Ottawa forced consumers, especially in Ontario, to pay Alberta more than the world market value. This federal generosity was quickly forgotten when prices ballooned and Alberta could charge Ontario world prices again.
As the price soared, the Trudeau government was under tremendous pressure from Ontario to lower oil bills. Energy Minister Marc Lalonde brought in the National Energy Program (NEP) in 1980, which had as its stated purpose to increase both Canadian control and Canadian ownership of the energy industry while piously declaring that it sought to protect all Canadians from surging oil prices.
Lalonde proposed measures such as price controls and federal taxes on oil and gas production, which would increase federal government control of petroleum.
Unsurprisingly, Alberta and B.C. saw this as a federal takeover of a natural resource through the back door. Which it was. The bumper sticker of the day in the far west was "Let those eastern bastards freeze in the dark."
To make matters worse, Lalonde and Trudeau were clearly enjoying sticking it to Alberta and B.C., which have never been much loved by Liberal governments and didn't matter politically anyway.
The NEP was abandoned by the Mulroney Tories but by that time the world price of oil had fallen so much it didn't matter anymore.
Today, as the world price of oil rises, Mr. Harper will face precisely the same problem Pierre Trudeau did. With this added wrinkle: his Liberal predecessors didn't grab at all resources in all provinces -- just oil and gas. Ottawa would never get away with that today and the PM knows it.
But what can't be done up front, must be done by stealth. Thus the trial balloon that defines provincial wealth under the equalization formula by including the value of their resources, something not hitherto done. And that indeed does amount to taxing oil and gas by the back door. But if, unlike the NEP which only grabbed oil resources, the feds nail "resources" period, Ontario Premier Dalton McGuinty, unlike his predecessor Premier Bill Davis at the time of the NEP, will see his province as being richer, thus liable to pay more towards equalization.
Mr. Harper is in a bind. His power base is in Alberta and British Columbia and he doesn't want to alienate them by grabbing at resource revenues. On the other hand, he can't win an election without Ontario, which will be alienated if he doesn't help them.
As John Kennedy said, "there are days when leaders earn their salary."
This is also why George Bush is in Iraq and is spoiling for a fight with Iran.
High oil prices will have a huge, adverse impact on Ontario, while creating a huge windfall for Alberta, which isn't at all interested in giving a break to Ontario industry, already in trouble with the rising Canadian dollar and the ravages of globalization.
We've seen this movie before. Back in the '70s oil costs suddenly soared under the friendly eyes of Sheikh Yamani and the OPEC cartel, which brought about this bit of irony. When the world oil market went in the dumper in the '60s, Ottawa forced consumers, especially in Ontario, to pay Alberta more than the world market value. This federal generosity was quickly forgotten when prices ballooned and Alberta could charge Ontario world prices again.
As the price soared, the Trudeau government was under tremendous pressure from Ontario to lower oil bills. Energy Minister Marc Lalonde brought in the National Energy Program (NEP) in 1980, which had as its stated purpose to increase both Canadian control and Canadian ownership of the energy industry while piously declaring that it sought to protect all Canadians from surging oil prices.
Lalonde proposed measures such as price controls and federal taxes on oil and gas production, which would increase federal government control of petroleum.
Unsurprisingly, Alberta and B.C. saw this as a federal takeover of a natural resource through the back door. Which it was. The bumper sticker of the day in the far west was "Let those eastern bastards freeze in the dark."
To make matters worse, Lalonde and Trudeau were clearly enjoying sticking it to Alberta and B.C., which have never been much loved by Liberal governments and didn't matter politically anyway.
The NEP was abandoned by the Mulroney Tories but by that time the world price of oil had fallen so much it didn't matter anymore.
Today, as the world price of oil rises, Mr. Harper will face precisely the same problem Pierre Trudeau did. With this added wrinkle: his Liberal predecessors didn't grab at all resources in all provinces -- just oil and gas. Ottawa would never get away with that today and the PM knows it.
But what can't be done up front, must be done by stealth. Thus the trial balloon that defines provincial wealth under the equalization formula by including the value of their resources, something not hitherto done. And that indeed does amount to taxing oil and gas by the back door. But if, unlike the NEP which only grabbed oil resources, the feds nail "resources" period, Ontario Premier Dalton McGuinty, unlike his predecessor Premier Bill Davis at the time of the NEP, will see his province as being richer, thus liable to pay more towards equalization.
Mr. Harper is in a bind. His power base is in Alberta and British Columbia and he doesn't want to alienate them by grabbing at resource revenues. On the other hand, he can't win an election without Ontario, which will be alienated if he doesn't help them.
As John Kennedy said, "there are days when leaders earn their salary."
posted by Ottawa Gas Prices | 5:50 AM
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