Canada -- gas jockey to the United States

Frances Russell

Winnipeg Free Press

March 11, 2009

 

Is Canada an emerging energy superpower? Or just America's gas jockey? And who is the world's real energy superpower?

 

Prime Minister Stephen Harper declared Canada to be "an emerging energy superpower and secure source of almost limitless energy resources" in 2006.

 

Canada's tarsands contain the second-largest reserves of oil in the world, second only to Saudi Arabia, but "bigger than Iraq, Iran or Russia," Harper said in a July 2006 speech to the Canada-United Kingdom Chamber of Commerce in London. "And let's be clear, we are a stable, reliable producer in a volatile, unpredictable world."

 

Harper also noted that Canada is the fifth-largest energy producer in the world -- third in gas, seventh in oil and first in hydroelectric power and uranium.

 

Then, in September 2006, he told the Economic Club of New York that "what this means in terms not only of the strength of our economies, but also the security of our continent is sometimes under-appreciated."

 

The Canadian Defence and Foreign Affairs Institute commissioned Calgary economist Annette Hester, a research fellow with the Centre for International Governance Innovation and the Washington, D.C.-based Centre for Strategic and International Studies, to investigate Harper's superpower claims.

 

"The idea of Canada as an energy superpower is empty," she told an Ottawa CDFAI conference titled Canada as an Emerging Energy Superpower: Testing the Case, in October 2007. "Canada doesn't even know what it wants, it doesn't even have a sense of self and it doesn't use energy in any way, shape or form in foreign policy other than going out and saying invest, invest, invest."

 

Canada's inability to have a national energy policy weakens its hand on the global stage, Hester and other experts said. Canada also lacks both the market share and market heft to qualify as a superpower.

 

"A superpower is one that has the ability to define the rules of the game and who can change the rules unilaterally if necessary," Université du Québec à Montréal Prof. Albert Legault stated.

 

"To put it in the simplest terms of all, Canada does need an energy policy at the national level," Canadian Gas Association president and CEO Mike Cleland told the audience of bureaucrats, academics and energy executives.

 

Under Canada's constitution, resources belong to the provinces. To say that they fiercely guard their constitutional power puts it mildly.

Ever since the Trudeau government's 1981 national energy policy nearly tore the country asunder, no federal government dares even ask provinces to co-operate on energy, let alone assert its national leadership role and develop a comprehensive Canadian energy and environmental policy.

 

It's time Canada got over something that happened a quarter-century ago, Cleland said. It "should be dead, should be buried and should be set aside so we can get on with the future. There is federal fear and provincial loathing of federal energy policy and we've got to get past that or we won't be able to act nationally."

 

Top-heavy with western, especially Alberta, representation, the Harper government is uniquely positioned to spend some political capital and grasp the NEP nettle.

 

It should borrow a leaf from Norway's book. The Scandinavian nation adopted former Alberta premier Peter Lougheed's idea of a sovereign fund to save non-renewable resource revenues for future generations and prevent them from distorting the economy.

 

Norway, with far less oil than Canada, puts 94 per cent of its oil revenues directly into its sovereign fund, which now totals $400 billion. It cannot be used for general revenue and strict rules govern all investments. Alberta dedicated just 30 per cent of its resource revenues to its Heritage Fund. The government stopped putting any money into it in 1987.

 

During the Ralph Klein years, the Heritage Fund "languished as a poorly managed slush fund the government often looted," reports journalist Andrew Nikiforuk. Although Alberta has received $148 billion in oil and gas revenues since 1976, the Heritage Fund now stands at just $16.6 billion.

 

Who is the world's real energy superpower? America, says Gordon Laxer, director of the University of Alberta's Parklands Institute. "America is the world's greatest primary producer when all forms of energy are considered -- oil, natural gas, coal, and most forms of energy to produce electricity."

It is second in natural gas and third in oil, just behind Saudi Arabia and Russia.

 

The U.S. produces 8.3 million barrels of oil a day and has 18 per cent of the world's natural gas. Canada produces 3.4 million barrels of oil a day and has 6.3 per cent of the world's natural gas. The U.S. has 707.4 million barrels of oil in its Strategic Petroleum Reserve buried in salt caverns in Texas and Louisiana. Although 40 per cent of Canadians remain dependent on offshore oil, Canada has no SPR.

 

Canada is exporting 65 per cent of its oil and 59 per cent of its natural gas -- to the U.S.

 

Canada is not any kind of energy superpower. It's just America's gas jockey.