Canada's internal squabbles resurface as oil prices sink
Ottawa — Canada's vast energy resources, often heralded as the key to solving the country's vexing regional disparities and deep-seated economic problems, have instead created new conflicts and controversies.
The new conflicts have led to:
* A breakdown of parliamentary business. The Canadian House of Commons has been rendered inactive for two weeks by an unprecedented dispute over the Liberal government's legislation to overhaul the oil industry.
* An escalation of Newfoundland's battle against the government. The poor, rocky east coast island announced March 15 it will seek an electoral mandate to fuel its fight over control of the oil bonanza beneath the Atlantic offshore waters.
* The collapse of funding for a crucial synthetic fuel plant in northern Canada. Private financiers are hastily pulling out of a plan to build a $13 billion plant to extract crude from oilsand deposits after three years of preparation.
* Uncertainty in a landmark energy pact between oil-rich Mich Alberta and the government. The pact, once hailed as a breakthrough in Canada's troublesome federal-provincial squabbling, now appears obsolete and misguided.
The main cause of the disruptions has been the recent downturn in world oil prices. This came at a time when Canadians, after years of low, government-regulated oil and gas charges, had finally accepted the need to pay international-level prices for their own gasoline and heating fuel.
While gasoline prices in parts of the US are dropping to $1 a gallon, stations in oil-poor eastern Canada are on average charging the equivalent of $1 .50 a gallon. Prices are scheduled to rise toward $2 by next summer despite the current soft world oil market.
The reason is a series of price increases worked out last fall by the government of Prime Minister Pierre Trudeau and Alberta, which produces 85 percent of Canada's oil. The Trudeau government decided it was time to end regulations that had kept Canadian prices below the world price level.
A five-year schedule of price increases is now in place. It has a ceiling of 75 percent of world price for the majority of Canadian-produced oil. But because that limit will not be reached until next summer, prices will continue to rise sharply.
This prospect has left Canadians confused and irritated. ''It's just incredible,'' said one Ottawa resident. ''We have all this oil, but we still end up paying world prices.''
The government, which promised to restrain Canadian price rises on its way to re-election in 1980, has been upbraided by the opposition for the current price hikes. It has also been bombarded by criticism from the oil industry and the United States for the wide-ranging, nationalistic energy policy introduced in late 1980.
The Liberals' national energy program raises the share of oil revenues going to governments and relies on new tax incentives to reduce foreign ownership of Canada's petroleum sector to 50 percent by 1990 from the current 65 percent. Oil companies say the policy discriminates against US-owned firms and that taxes have stripped the industry of the profits needed to explore for new oil.
Obtaining parliamentary approval for the program has bgen slow. The second set of related legislation, known as the Energy Security Act, is so sweeping that the Progressive Conservative Party has used a procedural maneuver to paralyze business in the House of Commons since March 2.
The Conservatives want the extensive, multifaceted bill broken up to allow it to be debated fully. Former Prime Minister Joe Clark, now the Conservative leader, vowed to keep the Commons stalled ''forever'' if need be, ''to restore some real democracy to Canada.''
With the economy in the doldrums and unemployment rising, Canadians have been counting on a host of giant construction projects, most of them energy-related, to spur growth and generate jobs. Almost $300 billion worth of projects are planned for this decade.
But the huge energy projects, such as the projected Alsands synthetic oil plant near Ft. McMurray, Alberta, may prove impossible to build without the lure of very high oil prices - something that may not materialize now that OPEC is on the run. Falling world prices, high interest rates, and hard economic times have many investors jittery. ''Many businessmen fear we are headed into a recession even more serious than the one we are in now, maybe even a depression,'' says Stan Roberts, president of the Canadian Chamber of Commerce.
A bright spot has been the Hibernia offshore oil field in the Atlantic near Newfoundland. With an estimated 2 billion barrels of oil, it could ensure Canadian oil self-sufficiency in the 1990s. But development is being held up by a bitter feud between Newfoundland and the federal government. Both claim to own the oil. The conflict has moved into the courts after months of failed negotiations.
On March 15, Newfoundland Premier Brian Peckford, who claims his province needs all the revenues from Hibernia to escape its perennial state of underdevelopment, took things a step further. He called for a provincial election, asking voters to back him in his challenge to the federal government and ''help secure the future of our children'' in Newfoundland.