[Dougald]

Guys

Let us keep this discussion away from the personal. The current economic climate affects us all in various ways and it is recognized that some are affected more greatly than others. But this is not the place for semi political crusading against Big Business nor for remarks which may be construed as persoanl attacks.

The discussion to now has been spirited but civil - let us keep it that way.

Regards (with my moderator's hat on) ... Doug

 

[Dougald]

I have watched with some interest the commentary of Americans on drilling for oil in Alaska in ANWR. I can appreciate fully Ron's (blackburn)comments on the fundamental economic boost it would give to the state and those who live there. But I cannot understand the remarks of those who think it will help lower the cost of gas in the US.

Here in Canada, there are huge reserves of oil - in the Beaufort Sea, in Hibernia and of course in the Athabascan Tar Sands. But in extracting this crude oil, no consideration is given to subsidizing it to provide low cost gas to Canadians. It would be absurd and economically stupid to sell oil to ourselves cheap when we can sell it at world prices to Americans. I assume the same would apply to oil from Alaska.

The oil is a natural resource occurring mainly under land in Canada held by the Crown. The Crown (government) sells the rights to the oil and takes its cut that way. Taxes are levied on the sale of gas to pay ostensibly for roads - the governments are actually in surplus. The capitalist market is working about the way one would ex[pect.

In terms of environment and electricity, no one in this country laments California's decisions to not generate power for themselves - we make a huge multibillion dollar annual windfall selling power to California and some other states too. Again, electrical utilities here are governmkent run so that windfall profit goes straight to reducing the tax burden. Most Canadians have no qualms about nuclear power though the acid rain debacle has pretty much convinced us that coal is a terrible answer.

Nuclear power is the low cost option available now - I can only say to the environmentalists who oppose it that it helps to have the government run it. Would you trust nuclear power in the hands of the typical private sector firm cutting every cost to maximize profit?

Regards ... Doug

 

[Dougald]

Mark

All good stuff and I really do hope that you guys use the technology to keep the acid rain off us. Canada has little coal and none in the east so it is not an option I would expect to see here. In any case, nuclear is a well developed technology, uranium is readily available and a lower investment needed to produce very clean power - cold water is no problem for the cooling requirement.

Ontario was a bit shortsighted over the last couple of decades in not building new power generation but the Churchill Falls project in Labrador and the James Bay project in Quebec permit the export of billions of dollars annually in electricity ... similarly BC generates and exports several billion dollars of electricity.

Exporting energy, whether electricity, crude oil or natural gas, to the US is one of our biggest industries. And while it is of enormous benefit to Canadians generally (because natural resources are generally owned by the Crown) and specifically for those employed in the business, it is primarily there because for a number of reasons, Americans cannot or will not produce their own energy.

Regards ... Doug

 

[Dougald]

Joe

Speaking here as citizen of a foreign country ...

The USA consumes way more oil and energy of all types than it produces. As such you must buy on the world market and pay the world price.

Your contention that demand for oil has declined or is flat may or may not be true for the American economy but in a world wide context it is false. The balance between supply and demand for oil is precarious and just a slight imbalance causes a big movement in price. China provided that slight imbalance coupled with some declines in production in a few major oil producers (Russia, Nigeria and Mexico).

Canada is a major producer of all sorts of energy but we do not sell it to ourselves at a subsidized rate. We charge the world price to ourselves (and to you) for a simple reason - we learned long ago that distorting a market with subsidies is costly and prevents the long term adjustment that price provides.

Oil companies who have access to oil reserves that they can pump do make a huge windfall profit. But they also took a huge risk at some point in the past to drill. Right now, the Beaufort Sea has large reserves of oil. It may be just profitable at current prices ~$125/barrel to extract BUT it is risky. The Beaufort Sea is in the Arctic, there is not an oil pipeline through the Mackenzie Valley and a large investment is required before any profit can be made. The Crown owns the resource but I would be most surprised if the government were to go back into the oil business (didnt we learn that once with PetroCan?). An oil company who makes the investment today in the Beaufort Sea may someday make an enormous profit when oil is worth ~$250 per barrel but that is the stakes that are being discussed.

I am not an American citizen and cannot vote or otherwise have a say in American policy. For us here in Canada, I am in favour of maintaining the sale of energy at the world price ie no subsidy, making additional investments in nuclear power generation and encouraging (not through tax breaks!) the private sector to make the investment required to extract natural resources like oil.

The only thing I can wish for about the American approach is that if you continue to burn coal, at least do it cleanly. Global warming, true or otherwise, is a benefit to Canadians (just ask anyone around Ottawa if a few degrees warmer wouldn't be better!) but polluting the atmosphere is not helpful to those like us who have the prevailing winds blow our way.

Regards ... Doug