In the Globe and Mail Wednesday July 22, 2015 were several articles about the oil and gas industry.
Food banks in Alberta are running out of food in small towns.
Companies can’t sell their natural gas because pipeline capacity is too small.
There are record vacancies in Calgary office buildings.
The Oil Patch is uneasy because markets look to stay low.
All of these articles talked about plummeting oil prices but none talked about the real problem for Canada.
The problem is the US has a monopoly on our oil and gas supplies. The US buys oil daily from Saudi Arabia, Venezuela and Nigeria for the world market price. At the same time depending on the day they buy oil from Canada for plus or minus CAD$15 below the world market price.
The result is $20 billion a year in subsidies from Canada to the United States. Worse the US collects the tax on that subsidy instead of Canadian governments. We lose $6 billion per year in taxes and royalties. Enough to wipe out the deficit in Alberta.
Many companies in Canada say they could compete if only they were receiving the world price of CAD$72 instead of less than CAD$60. We get even less for our heavy oil.
The same problem exists for our natural gas. The world LNG market has grown to 32 bcf per day. Canada’s share of this market is 0%. Why? Because our gas is also captive to the US market.
It’s not just the US. Even Eastern Canada buys its oil from foreign countries at the world price while at the same time Western Canada sells it to the US at a steep discount. New Brunswick, Quebec and Ontario even buy some of that oil from the US. Canada literally sells low and buys back high when it comes to oil.
The result is Quebec like other Eastern Provinces has a hydrocarbon import problem. Quebec industry and consumers pay too much for oil that is produced to unknown environmental standards that generate more emissions due to long distance transport. Their new energy policy will try to address this.
Alberta on the other hand has a hydrocarbon export problem that its new Government hopes to tax their way out of.
The $20 billion per year we lose selling discounted oil doesn’t count the loss of competitiveness for Quebec and the East caused by paying too much.
This is no way to run a resources superpower! A superpower is a superpower because it can protect its strategic interests. We can’t sell our oil and gas to the highest bidder. We can’t even sell it to other Canadians.
The solution is 100% within our own control. We just have to do what is in the interests of Canada and stop subsidizing America. Our farming, forestry and mining resources are sold all over the world and receive the world price. Its time we do the same for oil and gas.
As the Globe articles made clear, Canadians are paying the price because we don’t get our fair price.