The Oil Drum: Canada

NAFTA simply states that Canada has to treat North America as a single market and if it doesn't then it must continue to supply the US in proportion to what it was providing. As long as we aren't showing preferential treatment to domestic consumers the domestic consumers can outbid the US consumers for all of the domestic supply. There is also however an emergency clause that allows Canada to decare an emergency and do what ever it likes.

Fundamentally NAFTA laid out that Canada should treat all of North American consumers equally and that there would be no National Energy Board successor. Since the NEB is political dynamite in the west I don't think Canada gave up that much when they said they wouldn't institute another NEB.

I've been looking at this issue with regards to energy projects in BC. It is my assertion that the different electrical energy production modes are price competitive. Many don't see it that way as they tend to still think of the energy modes in their respective silos. Hydro is hydro, gas is gas, coal is coal, etc.

I was also alarmed at the long range pricing absurdity like the rest of you when I read BC Hydro's Natural Gas Price Forecast and the sister document Long Term Acquisition Plan (LTAP). Both use the EIA data stated in benk's article as foundation data. I wrote a nice email to the long range planning team at BC Hydro of which I received a nice long reply stating essentially, "You're points may be valid, but the EIA is the EIA and we've put all this work into these planning documents - how can we be wrong!"

This debate is not over by any stretch and I will have the opportunity to reiterate my case with the BC Utilities Commission (BCUC) whom regulate all the utility pricing including NG in the province.

About all that gas going south, ya well..., Canadians are going to get blindsided by selling it all off in the insane myopic rush to generate revenue - now! I'm sure the Brits are thinking the same about the squandered North Sea oil. Matter of fact, that big-ass pipe line system goes right past our proverbial back door here in Prince George.

With the recent news about GM shutting down truck plants in Ontario, I think we would welcome reopening NAFTA. Now that auto manufacturing is contracting in N. America, Canada does not hold any advantages with NAFTA and can start using the energy exports to the U.S.(oil, NG, electricity) as a great big negotiating stick much the same as the Russians are inclined to do. (See Vlad, we do pay attention!).

And in this intra-continental dynamic there is one lurking giant elephant in the room and that is water. More than oil and gas, we've always known exporting water to the U.S. was the slipperiest of slippery slopes; and thus, have never opened that precedent. They want to make it a part of the SPP, but Canada is holding fast to excluding the water. If the status quo holds, I expect most of the international agreements to fall into non-compliance within five years as the U.S. does what it wishes with the Great Lakes. But we have a long history of the U.S. not honoring the trade agreements, and doing what it feels like regardless of the trade law.

When will we learn??