Canada is the largest importer of oil to the United States, we have (arguably) the largest reserve of oil in the Alberta Tar Sands, but we have allowed massive amounts of foreign ownership in our petroleum industry. This article recommends that Canada nationalize our own petroleum industry. From this article:
Working in the Oil & Gas industry in Calgary, the oil capital of Canada, I don’t doubt those figures at all.
Nationalizing our oil industry seems like an obvious good idea, but it makes me wonder why it hasn’t been done, or why so many foreign investors were allowed to buy large chunks of our petroleum industry in the first place.
Capital.
Whether or not nationalizing Canada’s petroleum industry is a good or bad idea I’d say breaks down to how you feel about nationalizing ANY industry…and what role you feel the government should play. Myself, I think its an incredibly stupid and short sighted idea and would do more harm than good…YMMV of course.
So are you planning to buy out the foreign investors, or will you just confiscate their assets? What do you think the effect of stealing the assets of foreign investors will be? If you buy them out, how much will that cost Canada? How much are you willing to see your taxes raised to buy oil companies? And how will the average Canadian citizen’s life be improved now that the oil companies are publicly owned? How will you benefit exactly? Is the idea that the companies are paying dividends to shareholders, and if Canada bought the companies then the Canadian government would get the dividends? Then why exactly are those companies the most attractive investments? And do you really want the Canadian government to become an investment manager like Warren Buffet?
With a nationalized petroleum industry and your country’s open-door immigration policy, foreigners could now own a piece of the pie without investing a dime.
I believe Lemur866 has raised most of the pertinent questions. I’d just add one of my own: wouldn’t such an act kind of stick a crowbar into the spokes of the NAFTA agreement? Assuming anyone agrees NAFTA is a useful thing to begin with, of course.
Yeah, we should do the same thing in the Gulf of Mexico, where them damn furrin companies like BP, BHP Billiton, ENI, Nexen, Petrobras, Shell and TOTAL are sucking up much of our oil. Hey wait a minute, at least one of those outfits is Canadian…
Seriously, though, maybe it’s because the general trend these days is to not think that it’s such a great idea after all. In Mexico, for example, there seems to be a dawning recognition that the PEMEX monopoly is not a particularly efficient organization, and it has begun farming out contracts for things like operations and maintenance to reduce costs and boost production. The outfit I work for (disclosure: French ownership, privately held) has benefited from one of these contracts.
A few random additional comments:
Sharing risk among several companies is a standard operating procedure in the oil industry, especially for projects in deep water, or anywhere the costs of getting to a viable level of production are likely to be large. Getting Hibernia, for example, on stream required a rather large investment in infrastructure. Could a nationalized Canadian industry have accomplished that without the investment and technology of partners such as ExxonMobil? Maybe, maybe not.
In the near future a major exploration program is likely to get under way in the Orphan Basin offshore Newfoundland. I note that to this point, only eight relatively shallow wells have been drilled in the basin (Ref: Oil & Gas Journal, Aug. 8, 2005, P. 34) and mostly by consortiums of Canadian companies such as Petro-Canada, Canterra, Dome and others; none of these were successful. The new initiative is being undertaken by consortium made up of ChevronTexaco, ExxonMobbil, Imperial Oil and Shell Canada, and it is doubtful that any single company would be willing to drill on its own, given the risk, the lack of previous success, and the harsh (thus expensive) drilling conditions.
I can’t see nationalizing the industry. How long did it take for the government to divest itself from PetroCan the first time around? Remembering how well the NEP went over in the 70’s, I can see companies doing everything they can to avoid centralization of the industry.
I wouldn’t worry too much about NAFTA. The United States is arrogantly refusing to honour the commitments made in NAFTA so the whole thing is starting to unravel anyway. Softwood Lumber
Agreed. NAFTA is apparently worth less than the paper its printed on. If the US can casually steal $5 billion and thumb their noses at the treaty and Canada, then I say it’s time to give our 6 months notice and back out of the fucking thing. It’s done more harm to us than good.
(sigh) Why am I not surprised that this administration might be ignoring the detrimental effects to international relations of its stance on a particular issue ?
My sympathies; would nationalizing Canada’s petroleum industry cure what’s ailing NAFTA, however? Gotta say I don’t see it.
What “open door immigration policy”? What does that mean, exactly, and why do you feel Canada has one? This is a common American comment but I’m not sure I understand what it means, or if it means anything at all. You do know we restrict immigration, right, and that you can’t just walk in and be allowed to live here?
Hodge:
That doesn’t make any sense at all. The only reason you even know about the softwood lumber issue is because NAFTA exists; absent NAFTA, the lumber issue would still exist, and so would a hundred other similar tariffs, and you wouldn’t notice it at all, just as you didn’t hear about it in 1987 when we didn’t have a free trade agreement.
Saying NAFTA doesn’t work at all because of this one issue is very akin to saying that the Criminal Code doesn’t work because someone in Lethbridge had their car stolen yesterday. Throwing the baby out with the bathwater is, well, stupid.
If you tear up NAFTA, how does that fix this issue? It doesn’t fix it at all. I agree the U.S. government is breaking its word and violating a contract it signed; they’re being liars and weasels, and there’s really no room for interpretation on the matter anymore. But why would you want to “solve” the problem by making it much worse and putting hundreds of thousands of Canadians out of work? What the hell’s the point of that?
NAFTA has in fact been a huge boon to Canada. Our trade surplus with the United States is enormous, and has grown remarkably since the original FTA. The influx of capital and number of new jobs created by increased U.S. trade is staggering.
I agree something has to be done, but just saying “fuck the whole concept” ain’t it. The first strategy should be to approach the prospective DR-CAFTA countries with this example and say, “Look, the Americans are liars and bullies. Whatever contract they’re offering to sign, it’s bullshit. You can’t trust them. Ask them about it.” Make it harder for the Bush administration to get CAFTA going and you’ll see them express more interest in maintaining NAFTA.
OK, my last post was written in the heat of the moment. However, I still don’t think NAFTA is all that it was cracked up to be. We’re still members of GATT and WTO and there may be some options there that the useless dispute settlement mechanism of NAFTA hasn’t offered us. IMHO, putting all our eggs in one basket in an attempt to secure access to US markets has been a double-edged sword, esp. when the US has bargained in bad faith.
I do like your idea of embarassing the US in front of CAFTA countries, though. Too bad the current US admin is thoroughly shameless.
Yeah, the NEP was one of my first thoughts, too, as in, “Didn’t we try this once already, and it kicked the petroleum industry (i.e. Calgary/Alberta) in the teeth?”
Speaking of the U.S. thumbing its nose at trade agreements and such, it occurs to me that the continued U.S. tendency of willfully ignoring the rest of the world could lead to the rest of the world getting fed up with it at some point. Should be interesting when that happens.
Thats a rather simplistic and one sided view of things…especially if we are talking about trade. Simplistic because other countries trade with the US because its in their best interest to do so…not because its in ours and we are exacting tribute or something. So, I have my doubts that they are going to get ‘fed up’ and stop trading (which is what your statement implied). One sided because the US usually trades at a deficit with other nations, nations who don’t exactly have perfect trading records themselves and will screw over the US or anyone else if they can. Put it this way…who do you suppose benifits more out of NAFTA (since that was the example used in the thread of US skullduggery)? Canada or the US?
Then you are further out in left field than I thought. Why exactly would the rest of the world, who’s economy is so closely intertwined with the US, WANT to go to war with the US? Cutting off their collective noses to spite their faces? And if they did, what exactly would they be going to war FOR…what would their goals be? To see how much economic damage they could inflict on the US while seeing their own economies go down the toilet? And of course the big question would be…what would the rest of the world do exactly when they got their asses kicked?
The tariff dispute is the last in a series of U.S. showing other countries how little they care for anyone else’s opinions or wellbeing - others being (for examples) the slamming shut of the U.S. border to Canadian beef, ignoring a U.N. resolution to stay out of Iraq, illegal invasions of Grenada and Panama, Cuban interference (it’s a long history), a little Asian country called Vietnam; basically stepping on other country’s toes since World War II.
As for global economies go, Brazil is an interesting study in a real economic threat to the U.S. As for physical ass-kickings, if China throws in their lot with the rest of the world, I would not be betting on the U.S. As for countries with nothing to lose, let’s look at the former U.S.S.R., a nuclear power with an already-devastated economy and almost no physical barrier from the U.S.
And it’s worth a nuclear war? You’re still bitter over Panama? Gosh, that’s, like, insane.
Honestly, if you think the softwood lumber and beef bits constitute major trade issues, you don’t know from major trade issues. Trade between the two countries is remarkably open and free, and you’re suggesting war? Nuts.
Then you have not the first clue what you’re talking about. A war between any nuclear power armed with ICBMs and the rest of the world will result in both sides losing.
Why exactly would the rest of the world, who’s economy is so closely intertwined with the US, WANT to go to war with the US? Cutting off their collective noses to spite their faces? And if they did, what exactly would they be going to war FOR…what would their goals be? To see how much economic damage they could inflict on the US while seeing their own economies go down the toilet? And of course the big question would be…what would the rest of the world do exactly when they got their asses kicked? 