Thursday, October 27, 2005

How to loosen American grip on our energy?
>by Linda McQuaig
October 24, 2005

When it comes to oil, the Middle East is where the action is. Or as Dick Cheney once put it — before he was vice-president and became careful about saying such things — the Middle East is “where the prize ultimately lies.”

Outside the Middle East, generous oil endowments are rare. Interestingly, Canada is among the well-endowed. With our small population and relatively abundant reserves, we are one of the few western nations with the potential for something the U.S. yearns for: energy independence.

Oil is the lifeblood of the modern economy. It's the most effective and flexible form of energy, so we could count ourselves lucky up here.

Too bad, then, that we trusted our fate back in the early 1990s to a small team of negotiators appointed by the Mulroney government.

Sadly, in the course of negotiating the North American Free Trade Agreement, these Canadian negotiators acquiesced to Washington's demands for guaranteed access to our oil. They agreed to Section 605, which prevents us from cutting back our oil exports to the U.S. The section also prevents the U.S. from cutting back its oil exports to us, but they don't export oil to us.

This has potentially ominous implications for Canada.

The world is rapidly running out of easily accessible oil. Supplies of affordable oil will therefore be more precarious in the future. A recent report by the U.S. Energy Department's National Technology Laboratory bluntly noted: “The world has never faced a problem like this.”

Of course, oil contributes to global warming, so it's important we reduce our consumption. But, until we move to an alternative or learn to live with less, oil remains crucial to our way of life.

Yet, despite looming oil shortages, Canada is blithely exporting roughly 70 per cent of all the oil we produce each year to the U.S., rapidly depleting what's left of our easily accessible oil. Under NAFTA, we can't cut back that proportion, unless we cut our own consumption.

Meanwhile, Canada is also an oil importer. The eastern and central parts of the country, including Ontario, rely heavily on imported oil.

So, if there were international oil shortages, many Canadians would suffer. NAFTA would prevent us from redirecting oil headed for the U.S. to destinations in Canada, no matter how great the Canadian need.

If this doesn't amount to handing over too much control over our oil to the U.S., what would?

The Mulroney government presumably surrendered this control in exchange for what it said was a guarantee that our goods would have access to the U.S. market — a guarantee which, we were told, was Canada's reason for signing NAFTA. But the final deal contained no such guarantee, as Canadian critics noted at the time, and as the ongoing softwood lumber saga underscores. So we not only gave up control over our oil, it seems we gave it up for, well, nothing.

Originally published by The Toronto Star Linda McQuaig's column usually appears every Monday.