Thursday, September 01, 2005

Canada's Sovereignty Over Her Oil

Gasoline prices rose hours after Hurricane Katrina devastated New Orleans, set oil wells adrift in the Gulf of Mexico, and damaged refineries. Several things come to mind:
  • The gasoline they're selling now is not the gasoline that was refined after Hurricane Katrina but before Katrina, so as most people have pointed out, they've just added pure profit onto the selling price...at the moment.
  • Canada is, as far as I recall, number 2 in the world for oil, and we are self-sufficient. How then does oil refining in another country affect our supplies?
  • One oil analyst said on the TV news that the continent is so integrated that when the USA's refining costs go up, ours do too. That means we have given away our sovereignty over our oil patch and oil refining to another country. This does not happen in other oil-producing nations. I don't believe one of them has raised their price from 4 cents to 5 cents per litre, or whatever ridiculously low price they pay at the pumps, because of Hurricane Katrina.
  • Oil is a valuable commodity, vital for the healthy functioning of our economy. Our politicians have watched and abetted the giving away of control of our oil resources to others, mainly the US government and US companies, although China is now starting to horn in. It seems that Alberta is more concerned about exporting to the US than in taking care of her own country's oil needs (it still boggles my mind that there are more trade barriers between provinces than between Canada and the US). As a result, we Canadians have become vulnerable to economic downturns, with accompanying job losses and price hikes, when the US suffers a catastrophe such as this hurricane or if she makes a major decision regarding oil...and perhaps in the future China too. Thus we may be self-sufficient in oil production, but we are not sovereign nor self-sufficient over oil cost and oil supply. I wonder if we have oil squirrelled away like the Americans do in case of a rainy day.
  • The softwood lumber issue has opened a window to get back control over oil supply and gas prices to protect the Canadian economy. The Prime Minister needs to stop waffling and follow Jack Layton's suggestion as a first step. Then we need to ensure all Canada's oil needs are met before any is exported, and if our needs spike, then that means exports go down not that exports remain the same, and we have to pay more because our portion can't meet the demand of a freezing winter.
  • On the flip side, highly inflated gasoline prices, if they remain that way long enough, might finally force consumers (and thus in tandem car manufacturers) to buy hybrids, diesel, biodiesel, and propane cars. In the long term it may be a good thing for our environment and our economy, the latter because it will force innovation thus creating jobs in the alternative fuel market.
Update: According to the September 2nd issue of The Toronto Star, people are complaining but not switching, and the photo on the front page of the business section shows that prices in the US are still lower than during the energy crisis in 1973. It is going to take much more than this short-term blip to change people's habits. After all K-Cars were replaced by SUVs in the last 30 years!

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