Albertan oil fuels Canada energy war

While the economic future of the Western world hangs on the oil spigots of the Middle East, Canada's very stability as a nation hinges on who controls the black oil derricks in the prairies and mountains of its western provinces.

In essence, an "energy war" has erupted between east and west Canada. It was touched off July 31 by the unilateral action of Alberta's provincial Premier, Peter Lougheed, to increase oil and natural gas prices without federal approval.

Alberta's defiance of the central government is as potentially divisive for Canada's loose confederation of provinces as was last May's referendum on Quebec "independence." (After much hoopla Quebec voters, in fact, turned down moves toward separation.)

"The future of Canada is task," stated Alberta's energy minister Merv Leitch after failing to reach a pricing agreement with Canadian Prime Minister Pierre Trudeau and then raising oil and natural gas prices by 13 percent. Other western provinces are expected to follow the price hike.

As the main fuel tank for Canada's industrial engine, Alberta believes it holds the political clout to redress long-held western grievances with the federal government and to help push Canada to energy self- sufficiency.

Two things divide Canada, however: (1) the pace to self-sufficiency and (2) how much federal or provincial coffers will benefit from the $40 billion expected as a domestic oil prices are raised to meet the present world price. (The present price of Albertan oil is about half the world price.)

What is emerging among the energy boom towns of Alberta is a "politics of resentment" that says Ottawa can no longer dictate pricing on a resource the provinces, not the federal government, "own" under the constitution.

"Our platter is full of oil sands, coal, and heavy oil," says Brent Scott, president of the quasi-public Syncrude Ltd., "but we need the profits to go after them.

With an estimated 20-year supply remaining in its conventional oil weels, Alberta wants Canadian oil prices to rise from its present 45 percent to 75 percent of world oil prices by 1984. This increase would help to develop new energy resources and diversify the western province's economy by the 1990s.

Alberta's largely untapped underground oil sands contain an estimated 600 billion barrels of petroleum -- or three times Saudi Arabian oil supplies -- but require a near-world oil price to extract the tar-like substance economically. Two plants in Alberta's northern tundra-like area are now "mining" easily accessible oil sands at about $18 Cdn A barrel.

"Alberta is a pure OPEC Country. Because that province is fortunate enough to have vast energy resources, it can do what it wants," says energy expert Fred Knelman at Concordia University in Montreal.

Alberta's so-called "petrodollars" have boosted its treasury by billions of dolllars, upsetting the economic balance sheet and regional power struggle in Canada. Taking energy pricing into its own hands will likely force continued stalemate in constitutional talks begun this year to resolve long-standing disputes over provincial authority. A court suit and new taxes on energy by Ottawa could prolong the national dilemna.

"Who speaks for Canada?" Asked Prime Minister Trudeau at a recent meeting of provincial premiers. "We all do," responded Alberta Premier Lougheed, who has been nicknames the "blue-eyed shiekh of Saudi Alberta."

Claiming the province's energy resources as its heritage, Alberta last week rejected Mr. Trudeau's energy-pricing package, which would help balance the national debt and raise oil prices more slowly than Alberta wanted. In addition , Mr. Lougheed demanded that the province retain 45 percent of its petroleum profits, with 15 percent going to the central government.

The unilateral price increase is the first outright defiance by the sparsely settled west as it seeks a better deal from the dominating political and historic strengths of Ontario.

A survey in May by the Canada West Foundation in Alberta found 70 percent of western Canadians believe Ottawa ignores or overlooks the west. A majority said western Canada had more in common with the United States than the rest of Canada , but only a small minority were in favor of joining the US.