Canada's Conservative government has scrapped the nationalistic energy policies of the former Liberal government and has moved to decontrol energy prices. The deal is being called the Western Accord, an energy agreement signed by Ottawa and the three western provinces. It was something the former Liberal government could not get done. And it has made a political star of the energy minister, Patricia Carney. ``The days of federal-provincial acrimony and confrontation are over,'' Miss Carney says.
The new energy agreement will make it easier for foreigners to invest in Canadian oil and and gas ventures, and it lifts restrictions on exporting oil to the United States. ``It is up to producers and distributors to find their own markets,'' says a government official in Ottawa. Present restrictions will be phased out by June 1.
For the first time in 11 years, Canadian crude oil producers will be able to increase exports to the US. Natural gas exports may follow. Ottawa slapped controls on oil exports in 1974 when it worried that supplies of relatively cheap Alberta oil were running dangerously low. Exports to the US were limited to ``surplus oil.'' The new agreement will almost certainly mean an increase in oil exports to the US.
Natural gas exports to the US are set at 925 billion cubic feet for 1985. The energy minister froze natural gas prices at $2.79 (Canadian) per thousand cubic feet until Nov. 1, when Ottawa says it will have a new natural gas pricing policy.
All of this has made the energy-rich provinces of western Canada -- British Columbia, Alberta, and Saskatchewan -- happy because of the prospect of increased revenues for the provincial treasury from oil and gas revenues as well jobs from new energy projects. But it worries the consuming provinces such as Ontario and Quebec, where there is concern that prices at the pumps will go up.
Prime Minister Brian Mulroney has refused to deny that oil prices will increase to compensate for the C$2.5 billion shortfall in revenue from elimination of taxes on oil and gas. Many people -- opposition politicians among them -- expect taxes on gasoline at the pump will be part of a new federal budget.
The new agreement will do away with many federal taxes, including export charges on crude oil. Carney said Ottawa and the provinces want to promote investment in the oil and gas business and make sure that taxes are based on profits not revenues.
The oil industry, which had been a loud critic of the Liberals' energy policies, welcomed the move by the Conservatives in Ottawa.
``It will reawaken investor confidence,'' says Bernard Isautier, chairman of the Canadian Petroleum Association. ``Governments have given to my industry the tools for us to get back to work at the level we are capable of.''
Not everyone is happy with the energy agreement. ``The oil industry made out like bandits,'' says an economic nationalist in Toronto. That is a reference to the oil industry's being allowed to sell old oil at new prices.
``A huge windfall gift to the oil companies'' is how the agreement was described in the House of Commons by a New Democratic member of Parliament, Ian Waddell. His socialist party is predicting higher prices at the pumps. Industry critic Robert Laxer feels Canada is giving away cheap oil to the US: ``It's against the national interest. We're going to rue the day that we're selling all our cheap oil.''
Conservatives have heard that argument before. It was used the Liberal government under Pierre Trudeau. The energy policy replaces the National Energy Program brought in by the Liberals in the fall of 1981. NEP forecast oil prices rising straight up, as they had since 1973. It saw no oil glut in its bureaucratic crystal ball.
The energy agreement does not affect the central and eastern provinces of Manitoba, Ontario, New Brunswick, and especially Quebec, which all export electricity to the US. There are no restrictions on electricity exports, and there are no plans to change that policy.