Oil May Be Canada's Undoing
Political pressure bubbles and flows.
We are inexorably moving towards a huge crisis in Canada, as the issue of oil and natural gas is moving from the geological to the political.
The story begins with the oil crisis of the 70s, which raised the world price of oil. The Alberta government, under Peter Lougheed, raised the price of Alberta oil, which brought howls from Central Canada since they imported from Alberta. The Trudeau government, fresh from a 1980 election win, introduced the National Energy Program (NEP). The program imposed federal authority over energy resources and established new price and revenue sharing schemes without western consent.
In March 1981, Alberta cut the flow of oil to eastern Canada by five percent. Lougheed increased the percentage to ten percent in June. A poll conducted in 1981 showed that forty-nine percent of Albertans supported separation from Canada.
Memories of this program are long, especially in Alberta, and to a lesser degree, British Columbia. The NEP was followed by a long recession in the two western-most provinces, especially. The federal government tried to blame this on other external factors, but Albertans remain unconvinced. They remember the "recession" years as the times the oil rigs were inactive. The bumper sticker of the day read, "Let Those Eastern Bastards Freeze In The Dark".
Oil hostages
The same conditions exist today, for the Federal government to step in and try to regulate production of oil and establish an oil price that's favourable to Central Canadian interests. The price of oil is on the rise and many experts see the day not far off when it reaches US $100 a barrel.
If the Fathers of Confederation had known about oil and how it would underpin the economy, they might not have given control over natural resources to the provinces. But they did. And this had a profound impact on the Canadian psyche. When John A. Macdonald brought in the "National Policy," Western Canadians saw this as a plan, whereby, Central Canada bought western resources cheaply and sold them back as finished products at exorbitant prices: prices that were protected against American imports by high tariffs.
Moreover, due to favourable freight rates, it cost more to ship westwards than eastwards. I have often said that if you could explain why it costs less to ship a pound of nails to Vancouver from Ontario, but not the other way around, you would explain deep-seated western resentment.
Things have changed, of course. Western resources are heading south and west rather than east. The Free Trade Agreement has taken away the tariffs that protected Ontario and Quebec industry. Other provinces have become oil producers. Ottawa, nevertheless, faces the same problems it did in 1980 -- the regions with the biggest populations don't want to be held hostage by OPEC oil prices when there's all that Canadian oil around.
The Federal government can't "take over" natural resources, but it can use its taxation ability to accomplish the same thing, and it's hinting at doing just that. But while 1980 was a sensitive time for national unity with Pierre Trudeau working to patriate the constitution, the times are even more fragile now: Quebec has gained and continues to gain more and more independence; there is another referendum around the corner; the country is politically divided with no party able to claim that it's a national party. Further, Atlantic Canada now has oil and gas of its own, and while it still goes to Ottawa with begging bowl in hand, that's more from habit than need
It may well be that Canada's natural resources should belong to all Canadians, but they don't. In Western Canada, especially in Alberta and British Columbia, there is not only a deep-seated mistrust of Ottawa, there is a growing confidence that, if necessary, they could go it alone or together. In short, it is a time when Ottawa dares not ignore the energy needs of Central Canada, and at the same time, dares not further alienate western provinces.
And that is a difficult circle to square.
Rafe Mair writes a Monday column for The Tyee. His website is www.rafeonline.com. ![]()



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gasworks
6 years ago
Comments on "Oil May Be Canada's Undoing"
Sorry Rafe,
But this is the same old antiquated story we've all heard before. There is nothing new here, and more importantly no solutions.
Do you know that Terasen Gas imports a large portion of the natural gas we consume directly from the Province of Alberta? (This is despite the fact that we only burn up about 10 percent of the gas we annually produce right here at home - the rest goes south)
Go figure what effect that has on royalty revenues, or the consumers pocketbook for that matter.
Grumpy
6 years ago
I think Rafe is right on this one - who needs Ottawa anyways. It nothing but full of corrupt politicians, many who would rival Judas (Larry Campbell).
I can see the time when the West says enough and goes. It will be messy, but in the end the West will go its own way, really, body bags of dead Ontario and Quebec soldiers will turn the tide
I think within 10 years, the showdown will begin.
Chris H
6 years ago
I would find it hard to believe that Alberta could stand on its own as a North American, land-locked country. If they left Canada, the only real choice would be to join the US. It's laughable to suggest that BC would go along with them.
I do take exception to this by Rafe: "Further, Atlantic Canada now has oil and gas of its own, and while it still goes to Ottawa with begging bowl in hand, that's more from habit than need."
... And when I visited Newfoundland a couple of summers ago, I was shocked to see the big controversy in their papers. How they couldn't afford to pay paramedics $12 an hour. Not in need you say?
Fiat lux
6 years ago
I don't think it is oil, or any commodity, that could be Canada's undoing, but the legalized institution of market capitalist greed and foreign investment, that deny democratic decision making of peoples over the logical and
fair distribution of their resouces.
I repeat, that the textbook definition of economics is :"The science of the management and distribution of scarce resources", that under every ideology somehow becomes the establishment of robber baron ruling classes. Whether they're called "party cadres", "politbureaus", or "boards of directors". All the same bunch of thieves.
Ed Deak, Big Lake.
murdock
6 years ago
Fair comment Rafe.
Now consider the general parallel of the current 'welfare state' to the 'mother church' of the late 1400's and early 1500's.
In Europe where the church had massive control over lands and trade they continued to squeeze those controls tighter and tighter. It was only when the 'protestant' movement began and started to push back that the nastyness and conflict rose. Combined with a new information process (printing) and a different mercantile mechanism (bearer notes and the start of 'paper currency') this made the church's command over trade collapse.
Compare to now with the welfare state's control over vast territory, progressively using it to squeeze more and more tax (tithe) from the populace, forcing merchants to sell to them (the government) for less than they can get in the broader marketplace by various and sundry market controls. I say that the collapse of the 'nanny state' is at hand; with a new information process (the internet) and the continued emergence of a new mercantile process, or perhaps better expressed as a refinement of a very old one (digital currency expressed as finite amounts of gold).
Alberta, if taken in its current boundaries, is landlocked and will have a tough time 'going it alone'. The one-two punch that Ottawa must be fearing is BC & Alberta deciding together that confederation was a bad experiment and together declaring independance.
The memory of the NEP, and the continued sabre rattling from the 'ancien regime' in Ottawa should do just the trick and finnaly convince both 'left-coasters' and 'western canadians' that continued association with the 'two solitudes' crowd in Ottawa is a bad idea.
Fiat lux
6 years ago
I don't know where you learned your history, but it is way out. Church, or rather religious control of the economy has never really ceased. Most economic theories, like Marxism and capitalism are basically pseudo religions legitimizing exploitation by ruling classes.
The Calvinist theory of predestination is one of the main pillars of the present day neoclassical market economy the USA is trying to force on Earth.
State control is a relatively new phenomenon, because the old states didn't have the mechanism to exercise it. In medieval times the state was a very loose concept, the main power rested in the hands of the aristocracies, who maintained the power of the kings and churches.
The present religious division of Europe goes back to the Wars of the Reformation, when, huge areas were forced to change their religions overnight on the orders of their landholding nobilities and everybody had to jump, or be killed.
Now, where are the merchants forced to sell to governments at so called "lower prices" than what they could steal from the public? Is the government responsible for the daily price increases in our supermarkets, when their taxes are being lowered all the time and they pay half the wages they paid 40 years ago ?
The welfare state has been the idea and development of the Conservative government of Lloyd George in Britain, when they feared that the destitution caused by the "free market" idiocies of the great Depression will lead to revolution.
Better read up on you facts before losing sight of the facts under the influence of ideological hysteria. It is the so called "nanny state" that keeps the present market economy going, because without it people would realize that they're being screwed and wipe out this gang of international criminals stealing under the guise of the neoclassical market theory.
Ed Deak, Big Lake.
allan
6 years ago
Absolutely correct Big Ed.
None of the big financial scams of the past decade, none of the embarrassments of profit corporate Canada has never blushed over and none of the current problems facing the average worker would be
the issues they are if the "nanny state" wasn't alive and well.
The problem is, however, most of us see the "nanny state" looking after the small people, when in fact it's teats have been
monopolized almost exclusively by those with corporate interests.
David Lewis's "corporate welfare bums" learned long ago how to milk our belief in looking after those in need.
Fiat lux
6 years ago
I always find it amusing when people complain and tear their hair over "high taxes", while ignoring "high profits", which are also a form of taxation without representation.
I fully agree with the hue and cry over the 15% + wage increases the legislators voted for themselves, but why is there no screaming, when corporations announce record profits, or when Pattison buys another jet, or yacht, with monies stolen from our pockets every time we go to one of his stores ?
This again is the result of pseudo religious brainwash, excluding the ruling class of any human responsibilities and diverting attention from criminal economic theories. Our rulers learned it from the good old, divinely ordered aristocratic days and the regimes of Hitler and Stalin.
The similarities of the modern world with the above regimes are frightening and I saw them all. Never imagined that Canada could sink to those levels, now with an increasing speed, to satisfy the "demands of the marketplace and our dear foreign investors", eating us and our children alive.
Ed Deak, Big Lake.
redrivergirl
6 years ago
I could never have thought my country and province could have sunk to this level as well, Ed. It is really shocking.
Stuart
6 years ago
CANADA IS ALREADY GIVING AWAY TOO MUCH OF ITS ENERGY.
NAFTA’s “proportional sharing†clause ensures that the only way Canada can export less oil or gas to the U.S. is by cutting domestic consumption by an equal proportion. Canada now exports over 60 per cent of its gas supply to the U.S. How much more could the U.S. want?
Forget Alberta, we are bound by trade agreements, NAFTA requires we export a certain Amount to the US, we are having to buy it back to fulfill our own consumption, no wonder prices are going up. Not to mention we are selling oil companies to the US, no public hearings over the sale of Teresen, over 6000 submissions and no public hearings, about time we wake up and take control of our own lives, we are behaving like a banana republic to curry favour with the BUSH regime. 3 NDP MLA's are off to Ottawa to convince Paul Martin to block the sale, I suggest we lend them our support.
navpers
6 years ago
Glad that more and more individuals are realizing that it is not Provincial ownership that is the problem. It's NAFTA. The only thing so far that appears to be excluded is water - but then according to the Globe and Mail Peter Lougheed has been taking credit for keeping it out. Wonder how Maude Barlow and Al Hurtig feel about that?
Chris H
6 years ago
"Forget Alberta, we are bound by trade agreements, NAFTA requires we export a certain Amount to the US...."
Naw ... we can just ignore NAFTA. It works for the American government doesn't it?
Steve P
6 years ago
nyuk, nyuk
Post-succession BC & Alberta wouldn't be in NAFTA, although I suspect the US would still be interested in making trade deals with the new sovereign state(s) ... they need the oil, & BC & Alberta would need access to the US market.
murdock
6 years ago
Thus the way an INDEPENDANT BC or Alberta could address the problem.
regarding the history discussion, if my interpretations of the facts are so wrong, why is Vatican City not the capitol of the world?
As the emergence of an economy that cannot be taxed grows so shall the powers of the 'nanny state' wane until they cannot keep any of their promises. Unfortunately this process will take too long for me.
Grumpy
6 years ago
The real problem in Canada, what will really will shake-up the status quo is the mass of imigration coming into Canada. Very soon they will shift the balnace of power from Eastern two solitudes to a new powerbase West.
The South Asians do not care a fig about native land claims, multiculturalism, billingualism, etc., and when (it will be only a matter of time) South Asian's gain overwleming politcal power, the gaunlet will be thrown down to Ottawa.
Canada, due to our stupid policy multiculturalism and hyphenated Canadians, already has created a great ground swell of dissafected. The result will be nasty.
Why listen to Ottawa, they only want higher taxes to payoff Eastern Canadian companies like Bombardier, etc. One day someone will draw a line in the sand and then all hell will break lose. That time is closer than you think.
allan
6 years ago
You really are Grumpy.
Sorry, but your dream of western independance is just too far out there.
Count to 10 and then rethink your grand illusion. There is already a power base in the west, unfortunately it is used to keep the wealthy rich and the workers, at best, hoping.
That power base will only move toward separation from the rest of Canada if it is economicaly viable - for them.
That concept, in my view, is a pipedream pushed by a few neo-cons who see their personal salvation under the stars and stripes.
But putting that aside, what is going to get me and others to warm to Albertans who would as soon as not cut oil deliveries to us too if we offended them?
The rift between BCers and Albertans is as stong as the rift between BCers and any Maritime province so why would friends of the latter want to toss their fate into the hands of the former?
Before trotting out that separation ticket again, please sit down and ponder some of the changes you might get if your wish is too successful.
I respectfully suggest that separation speculation is a self-impose illness by those too lazy to think that madness through.
Now, as for Rafe's article. I think Peter Lougheed had a better argument in the Globe a week ago when he is it ain't oil but water that will be the cruncher for Canada.
And
Alberta is probably the province most at risk in the coming decades as global warming brings devestating water supply cuts in the eastern Rocky Mountain rivers.
Who know, perhaps Alberta and BC will find an accord between them to trade their raw resources across the board.
Fiat lux
6 years ago
The only purpose of the Western separatist movement is to join the USA. Which would be fate worse than death, especially the way the US is rapidly becoming a fascist state. Apart from being bankrupt and the most hated on Earth. I haven't crossed the border for 25 years, but we used to go down to Portland quite often before that to visit my wife's parents.
Even then, every time we were there, we could hardly wait to get back to BC. There was something rotten in the air already, 50 years ago. Especially when we saw the guards with shotguns standing behind the cash registers on SALE days in large stores and that we couldn't go for an evening walk as it wasn't safe.
We have some very good American born and raised neighbours now, who still have large holdings down there. They hate every minute they have to spend in the US.
Canada is the most beautiful concept on Earth, apart from the incredible physical beauty of the country. The envy of the world, isted as the richest country, with Australia.
Anybody who'd wanted to break it up for any reason has big problems in the head.
Ed Deak, Big Lake.
redrivergirl
6 years ago
Ed Deak, this is so true.
I wish that if Grumpy were right the new immigrants would realize that, that which makes Canada great is our egalitarian and strong commitment to equality. That involves paying taxes and personal responsibility to our fellow citizens.
I'm not feeling too hopeful about Canada at this moment. I can't believe how many traitors it's turned out we have.
I can say though, that a separated ALTA and BC would change a lot voters who vote 'right' to vote for more traditionally Canadian values and as well without the unifying 'ain't the east bad, ma' political tool, well...
We would be eaten up by the US. Too much foreign ownership now. Hey Tereson.
rockyvoids
6 years ago
Fait lux. Excellent postings all! As usual you cut to the chase.
Nationalism and rationalism make estranged bedfellows.
RickW
6 years ago
Grumpy:
And BC isn't? Only be trading one Dr. Evil for a Mini Me version. BC would polarize into Lower Mainland and The Rest of BC (TROBC), with the latter having the same complaints that now exist between this province and Ottawa.
If BC were to separate, and what with the (not broadcast very much) dissent in the US, it would be more likely that some variation of Cascadia would morph...
http://zapatopi.net/cascadia/
Chicken Lady
6 years ago
My heart bleeds for our wonderful country - to think that it is in real danger of being destroyed through idealogy and greed.
The only way the West is going to break the strangle hold Ottawa has on us is through a civil war. It has always been thus, when a king or regime finally got too oppressive for the people heads would roll and the people would take back their lives. The present regime knows this - why do you suppose they, in their clumsey inept way, are trying to take guns away from the oridinary man?
And don't ever think that the West will be allowed to go it alone. The minute bullets start to fly the U.S. will be in here like ugly on an ape to "normalize" us. They can't afford to have us fighting amongs ourselves which would threaten their oil and water supplies. They are just looking for some excuse to walk in (ala Iraq) and take us over.
And don't ever think that we would ever become part of the U.S., a fifty first state. The only status we would ever have would be merely as a colony to milk. If we did not have a Central Government that was friendly to the U.S., one that allows the U.S. to buy us up they would simply topple our government like they did in Guatamala and Bolivia and install their own. They have done it all over the world, how can we be so naive to think that they would not do it here? The stakes are even bigger here, right next door.
dorothy
6 years ago
Guns, now! That is such a nasty and messy idea...when all we have to do is think twice before we give away our consumer dollar. Think along the lines of Buckminster Fuller: Do not fight the existing reality - just create a new model to make it obsolete! How about we get minimalist in our choices. How much of our daily consumergoods are necessities of life? How revolutionary would it be, if we cut it to what is, and forgot all the cool junk? Capitalism such as it is, has gone way way past the point where it is not in fact very marginal and dependent on artificially induced 'needs'. Listen to the ads coming through in an average soap or primetime cops-and-robbers show, and try to figure how much of the stuff someone tries to sell you actually would serve to keep you alive and well, and how much is just 'stuff'. There is your revolution, no heads, no mess, no guns, no blood...
kent
6 years ago
What is needed is the political guts to get out of NAFTA. It has been obvious for some time that the U.S. has no intention of living up to it's side of the bargain. All we need is the political will to give the six months notice required to abrogate NAFTA, as we should have done years ago.
Ken McKee, Salmon Arm
woody
6 years ago
Fiat Lux
I got you beat on that one Ed I haven't gone across that border for 42 years(and never will again) Im aware of people who have been offered all expense paid for business trips that out right refuse to go to the states, it's just to scary and nutty there.
RickW
6 years ago
Dorothy:
This ain't Kansas, Dorothy! What you are hinting at is some sort of reality we ain't ready to cope with.....yet.
Step easy
6 years ago
Dorothy,
I agree completely. The problems we are dealing with here, specifically capitalism, is the direct result of greed. Human greed. And to be fair, we are ALL guilty, myself fully included. No policy, change in trade agreements, change in governments, global consensus on climate issues, or other enormous issues will begin to be resolved until we, the individuals, take charge of our own lives, and sell or recycle our cars, walk or cycle to work, bury the television, stop unnecessary spending, and decide to live well within our means (even if that means renting for an extended period instead of going into huge debt at the first opportunity).
Every big movement started with a series of little movements.
Fish-counter
6 years ago
The really big news for me on the Tar Sands is the report that there is aplan to build a nuclear power plant in northern Alberta, to supply the energy for the sand/oil separation process. This would reduce the use of natural gas in the process, "greening up" the Tar Sands operation.
While this makes a lot of sense, and it could be one of the few situations where nuclear power would be appropriate, it would also be the first such plant to be built in Canada in 20(?) years.
With the usual debate about unresolved waste disposal, I would have thought this plan would attract a lot more debate than it has. I met a British engineer recently, who assured me that the future of the world's energy was nuclear. He reminded me of those statements from the 1960's that nuclear-generated electrivcity would be "so cheap, it wouldn't be worth monitoring". That was before Three Mile Island and Chernobyl.
What do the Tyee crowd think? Is nuclear the way to go in northern Alberta?
chevy
6 years ago
This is a very complicated issue. Fiat Lux makes some good arguments but as grumpy as grumpy is, he hits the suject hard. The Orientals and South Asians coming into this country do not care about Aboriginal land claims, biligualism, and Canadian history. They are here to make money, create wealth at the same time be in a good medical system, better than the ones they had at their countries of origin. The free market that we once knew is gone. The big corps as we know them, are gone. They have become something bigger. They are entities unto themselves. They are divesting themselves of their manufacturing operations leaving it up to some small operations to manufacture while the tower in the sky does the research. I think the song My Hometown from Bruce Springsteen sums it all up. "Owner says these jobs are goin boys and they ain't comin back to your hometown". Why? Its become expensive to manufacture. I think the war in Iraq was far more than just for oil. I think it is for the US to maintain a footprint in the Middle East to maintain pathways for commerce and for future manufacturing bases. Next is Africa. The moment we hear about our friends in South America 'striking' or
'rising up' for higher wages, the manufacturing bases will shift from there also to places in Africa and the Middle East. I think we should all be poised for India and China to become superpowers and for us becoming their lapdogs. It scares me as I shudder to think what may happen to the rights I enjoy right now. Our jobs, our livelihoods are going but following them is also our way of life and what it really means to be Canadian. We're almost sold out. Almost, we can still get back, I think. Thanks Rafe for the debate, as we can still debate at this time.
IRJ
6 years ago
Trackback
wiley
6 years ago
We hafta kill NAFTA. It will suck this country dry, and pull us into more oily wars of terror. The South and Central Americans have learned a lot watching Canada's foolish subservience to US economic control, and have walked away from the FTA table for good. Power to the People!
I'm not complaining that gas prices in Canada leapt opportunistically upward with hurricanes in the Gulf of Mexico. It's still underpriced and wasted daily. But our oil comes from the tundra, so WTF? This lockstep juggernaut merely exposes the trade prison we're locked in, and how happy we are to wear Uncle Sam's striped "Final Solution" TM overalls (now made in China of course).
Independance is good at all scales, especially from environmental subsidy. We should be paying at least as much as bottled spring water for the devil's dark matter anyway, no?