Ethical Oil: Part 3, NAFTA

If you’ve already read Ethical Oil: parts one and two, you’ve suffered through the realities of our energy market in this country. You’ve read the back-and-forth about the very existential quandary that seems to be occupying ivory-tower environmental thinkers.

Trying to make sense of Canadian energy policy is not for the faint of the heart, so I called Gordon Laxer. The University of Alberta professor has spent the past 29 years in Alberta, having followed Canadian energy policy through the 60s to the first real emergence of a national plan in the 70s, followed by the wholesale auctioning of Canadian energy sovereignty in the 80s.

“We are basically an energy satellite or an energy colony of the United States,” he says.

“That’s the definition of a colony; when the people of a country don’t have first access to their own resources,” he says, laughing. “That’s what a colony is about.”

Laxer is referring to the North American Free Trade Agreement, specifically, the Proportionality Clause.

Under several layers of lawyer-speak, the clause basically stipulates that Canada may only create trade restrictions if; it does not decrease oil exports in relation to the amount being produced and it does not raise the price of oil beyond what is being charged domestically.

In simpler terms, there can be no trade restrictions that decrease the percentage or increase the price of oil sold to the United States or Mexico. Currently that proportion stands at 66%. Later in the document, it explicitly says that Mexico is exempt from the clause. And the US gets off easily, as it exports no significant quantity of oil.

So it begs the question; is Alykhan Velshi using his campaign to shill for the Americans?

“This campaign isn’t just directed at Canadians,” Velshi says. However, he acknowledges that the focus is heavily on the tarsands. Doing a search through the Ethical Oil website shows this quite clearly. There is only one post on that site talking about ‘ethical’ oil from the UK and Norway. The only reference to Newfoundland is in terms of how many Newfies work in Alberta.

“It’s the oilsands, not Newfoundland’s offshore oil, that has come under relentless attack, so that’s where we devote our energy,” Velshi says.

But he stresses that ethical oil can come from any country with good human rights. He just doesn’t talk about them.

“I try, wherever possible … to make clear that it’s not exclusive to the oilsands … my main focus is the oilsands,” he says. “Partly, it’s a resource issue. I don’t have time to become an expert on the north sea.”

This is part of the problem – we’re only having half the discussion. We’re having the discussion that benefits American markets, not Canadian ones.

But this can’t be right. Velshi believes in social justice! In the environment! In gay rights!

On the other hand, Laxer has a novel idea – challenge the Proportionality Clause, if we lose that battle, leave NAFTA.

Velshi isn’t convinced. “I’m a free-trader, and therefore I’m pro NAFTA. That having being said, I’m not an expert on all of NAFTA’s specific provisions,” he says. “As much as possible, we need to let markets determine these things.”

The markets are what have turned our energy regime into Frakenstein’s monster.

NAFTA aside, Laxer argues that the West doesn’t need the tarsands. Alberta’s conventional oil, combined with offshore oil in Newfoundland could sustain all of Canadian consumption. The same goes for natural gas and hydroelectricity.

In fact, Laxer says Newfoundland currently produces 20% more oil than Atlantic Canada uses and far more hydro power than they need. With massive new green energy deals in the works that involve the other Atlantic Provinces, we have an opportunity to slash our electricity production by means of oil and coal.

But, as always, we snatch defeat from the jaws of victory. A large amount of that electricity will be going to the United States. It will likely ease our use of coal, but not to the extent that it could. New England will benefit the most.

The crowning jewel of our new energy projects is the Keystone XL pipeline. It’s a $7 billion American project that would bring half a million barrels a day from Alberta into the Gulf states.

Breaking into a new export market would be good for Canada, we’re told.

Yet a backgrounder written by Laxer for the Pembina Institute, an environmental think-tank based in Alberta, says that this new pipeline will drive the market to increase production levels in the tarsands while at the same time raising prices – even in Canada.

The report reads, “TransCanada acknowledged that one of the primary benefits offered by Keystone XL would be an increase in the price of heavy crude, which would result in an increase of annual revenue to the Canadian producing industry of between U.S. $2 billion and U.S. $3.9 billion in 2013.”

The oil companies get more, and we get less.

With the pipeline facing an uncertain future, the push to justify Canadian oil is becoming more important than ever. So is the need to have a sensible policy that works for Canada. The battle won’t be won on whose oil is more ethical, or which side truly represents the environment – but on whose population is willing to stand up and demand a fair deal.


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