Canadian energy pact eases nation's internal squabbling

The Liberal government has taken some of the steam out of its bitter feuding with Canada's restive provincial leaders by acceding to western Canadian demands for sharp increases in this country's regulated oil prices.

The price rises, which will cause gasoline prices to triple by 1986, are contained in a historic energy agreement signed here Sept. 1 by the federal government and the western province of Alberta.

A measure of peace between Ottawa and Alberta, which produces 85 percent of Canada's oil and natural gas, is thereby ensured over the five-year life of the pact.

But the accord, which came after 16 months of grinding negotiations, leaves some issues unresolved and may well embolden other provincial governments in their already-contentious dealings with the central government in Ottawa.

Alberta Premier Peter Lougheed, whose government's oil wealth has made him the most powerful of Canada's 10 premiers, portrayed the agreement as an important victory for the provinces.

He said it means that in the future Ottawa will have to work out its differences with the premiers in a "spirit of compromise and cooperation."

The government of Prime Minister Pierre Trudeau also made a major concession by backing down on a plan to oppose a natural gas export tax.

This levy had become the focus of a bitter debate over which level of government -- Ottawa or the provinces -- has ultimate constitutional control over certain resource dealings.

Mr. Lougheed, who saw the proposed tax as an invasion of provincial rights, characterized Ottawa's decision to back down as a lasting precedent.

Because the Trudeau government has given in now, he said, it will be "very, very difficult" for Ottawa to reinstate the levy once the current pact expires.

The Trudeau government dismissed this suggestion, choosing instead to emphasize positive aspects of the agreement.

The accord "brings to an end a period of tension between a very important oil-producing province and the federal government," said Trudeau.

For years, energy-related issues have been at the forefront of Canada's troubled constitutional scene, and it is still not clear where the jurisdiction of the provinces ends and Ottawa's begins.

The accord could mean more trouble for the Trudeau government in that it seems to bolster the provinces' position. In the near future Ottawa must negotiate other outstanding energy differences with the provinces of Newfoundland, British, columbia, and Saskatchewan.

In a wider sense, the achievement of Alberta in winning higher prices and defeating the gas export tax may strengthen the provinces' hand in their efforts to derail Mr. Trudeau's year-old struggle to write a new Canadian constitution without provincial consent.

But the energy pact included pluses for Ottawa as well, including increased federal resource revenues and a promised approval by Alberta before the early construction of much-needed oil sands plants in that province.

As agreed, the Canadian wellhead price for oil -- now about $15 (US) a barrel -- will by 1986 rise to about $48 (US) and gasoline prices at the pump, now about $1 a gallon (Canadian), will rise to the $3 (Canadian) range in five years.