Over a Barrel: Canada's prohibited from cutting oil and gas exports to USA -- even if experiencing shortages
May 28, 2008 – Parkland Institute
EDMONTON -- Despite the fact that we are running out of natural gas, and that
we import 49% of the oil we consume, NAFTA dictates Canada’s government
cannot reduce the percentage of oil and gas we now export to the United
States even in times of domestic shortages. A new report released today by
the University of
Alberta’s Parkland Institute and the Canadian Centre for Policy
Alternatives (CCPA) says the only solution to this and other potential
scenarios is for Canada to pull out of NAFTA’s
“proportionality” clause.
Over a Barrel: Exiting from NAFTA’s Proportionality Clause
provides a brief history of the proportionality clause in NAFTA, and
highlights Canada’s energy insecurity resulting from diminished
conventional oil and gas reserves, our need to import 49% of the oil we
consume, and the fact that we export two thirds of our oil and 60% of our gas
to the U.S. The authors examine three scenarios in which the U.S. could
invoke NAFTA to limit the ability of Canadians to set our own energy policy.
“We looked at whether Canada could reduce exports for the sake of
conservation or environmental policy, or whether we could prioritize our
dwindling natural gas reserves for domestic value-added production, or even
for household heating. We cannot. We cannot even guarantee eastern Canadians
access to western crude,” says John Dillon, economic justice researcher
at KAIROS and co-author of the report.
“Barack Obama and Hillary Clinton have put NAFTA back on the table with
their musings about re-negotiating or ripping up the agreement,” says
co-author Gordon Laxer, a political economist at the University of Alberta.
“The Canadian government must realize it is the only country in the
world that has jeopardized the energy needs of its people in this way, and
move quickly to exit the proportionality provisions of NAFTA.”
The research also draws attention to the fact that even Alberta only has 8
years of established natural gas reserves remaining -- in direct violation of
its own legislation requiring a minimum 15 years of proven supply before any
can be removed from the province. The report calls on the Alberta government
to uphold its own policy.
The report concludes with a strong call to action by the federal government:
when an energy supply crisis hits and Canadians are trying to cope under
difficult conditions, the outcry for Canada to get out of the NAFTA clause
will be deafening. Instead of waiting for such a crisis and such an outcry,
the time to act is now.
This study is part of the ongoing work being done by Parkland, CCPA, KAIROS,
and other organizations to develop a Canadian energy security strategy, which
will meet the environmental, economic and energy needs of Canadians over the
long term.
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