Canada’s Layton Urges End to Guaranteed U.S. Access to Oil, Gas

By Theophilos Argitis

June 24 (Bloomberg) — Canadian New Democratic Party Leader Jack Layton, head of one of three opposition blocs in Parliament, called for an end to preferential U.S. access to the country’s energy supplies.

Canada, the biggest exporter of oil and gas to the U.S., should renegotiate the North American Free Trade Agreement to repeal provisions that guarantee a secure supply of energy to the country’s southern neighbor, Layton said in an interview.

Management of Canada’s energy riches may be a dominant issue in elections expected as early as this year, amid concerns about regional economic disparities, gasoline prices and the environmental toll of oil projects. Scrapping the provision would allow supplies to be redirected to Canadian consumers if there’s an “energy crunch,” Layton said.

Nafta, which came into effect in 1994, “locks us into an engagement of our energy to meet American needs, essentially putting in the back seat our own national needs,” Layton, 57, said in his Parliament Hill office in Ottawa. “No other country has allowed itself to be handcuffed that way.”

Canada, which sits on the largest oil reserves outside Saudi Arabia, is benefiting from record prices for crude and other commodities, helping the world’s eighth-biggest economy ride out a manufacturing slump amid weak demand from the U.S.

Still, the boom is generating disparities between oil-rich western provinces such as Alberta and factory hubs such as Ontario and Quebec, which are suffering the brunt of the U.S. slowdown.

Greenhouse Gases

The rush to develop oil fields in Alberta’s tar sands also has caused shortages of workers, homes and equipment and undermined a push to reduce the pollution that scientists say causes global warming. The oil sands will account for more than 40 percent of the increase in Canada’s annual greenhouse gas emissions from 2003 to 2010, according to the Pembina Institute, a non-profit Alberta-based research organization.

Canada should ban new oil-sands projects in Alberta to ease the industry’s impact on the environment, Layton said. Prime Minister Stephen Harper also should reverse corporate tax cuts and use some of the savings for “strategic investments” that help the country’s ailing manufacturers, he said.

“We need key sectoral strategies in the core sectors,” Layton said, referring to industries such as forestry.

Harper’s Conservative Party has 127 of 308 seats in the House of Commons, leaving them short of a majority and forcing them to rely on opposition parties to pass laws and stay in power. Layton’s New Democrats, which have voted numerous times to bring down the government, are the smallest opposition bloc.

Harper, 49, has said moving too quickly to curb greenhouse gases would threaten Canada’s economy, while requiring new oil- sands projects to capture and store carbon emissions.

Liberal Party Leader Stephane Dion, who heads the largest opposition party, promised last week to implement a new tax on emitters should he win power in the next election, proposing to use the funds to cut taxes for individuals and manufacturers.

Dion’s tax plan wouldn’t ensure emissions will be reduced, Layton said, arguing tougher caps on polluters are the best way for Canada to tackle climate change.

To contact the reporter on this story: Theophilos Argitis in Ottawa at targitis@bloomberg.net.