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Keeping in mind the political desire by some to restrict oil exports in the name of saving them for the day they start to "run out", I have some thoughts.

Just because prices are high now, compared to the recent past anyway, does not mean the world is running out of oil. The price is high because demand has been rising inexorably, while supply hasn't kept up. Basically the reason supply hasn't kept up is the major oil companies (and others) went with the philosophy "won't be fooled again" and chose not to engage in new major exploration due to the "temporary" run up in oil prices. It still may be temporary in the long run, but most people seem to think pries will remain high for some time. Thus high exploration is going on again.

In other words, a typical commodity bust/boom/bust cycle looks to be happening in oil. No "Peak Oil" yet Virginia.

In the absence of Peak Oil, the most likely scenario under the "let's save our oil now for when we need it later" crowd will be that Canada blocks oil exports, causing the world price to rise yet higher in the short to medium term. This helps along the demand side conservation and search for alternatives to oil as well. Eventually enough new oil will be found, in conjunction with reduced demand on a continuing basis regardless of price due to new efficencies (ubiquitous hybrids and other high mpg cars) and oil replacements (electric cars anyone?) and the price of oil will tank.

When the price of oil tanks, those people who were thinking in terms of oil running out soon will realize they were wrong, or at least highly premature. The export ban will be ended, and Canada's oil reserves will be sold at extremely low prices instead of extremely high prices as would have occurred under a relatively free market regime.

True, in the meantime Canadians would receive lower prices for oil products domestically. But the beggar thy neighbor attitude sets a precedent that can be used against other provinces as well. No exports for x for similar reasons for what occurred in oil, and everyone Canadian benefits at the expense of the poor saps who invested in x and who were employed making x. Eventually no one gains if everyone is getting rent seeking export bans, and everyone loses. It also has the deleterious effect of radically discouraging investment in Canada.

Ecuador just recently effectively nationalized the oil in its country. Guess how many people will invest in Ecuador now instead of elsewhere? Guess what happens to Ecuador when the oil price eventually comes down again? Kaput, just like after the 70's boom and 80's bust.

One other scenario is even uglier for Canada, assuming you like a united Canada that is. A ban on oil exports that clearly hurts Alberta would have a really good chance at increasing seperatist prssures from Alberta, and they would encourage the same in Quebec as well of course. If such seperatism succeeded (peacefully or otherwise, most likely peacefully, Canadians being what they are, eh?) then oil exports would flow again of course, thus negating the whole idea in the first place.

But if one thinks Canada would be better off in three or more pieces, then this is a good stealth way to go about it.

That's a good point. Perhaps a better title for the post would have been 'Should Alberta be restricting oil exports?'

happyjuggler0 is right. If any Ottawa government went anywhere near Alberta's oil again, Alberta would separate.

I believe also the Supreme Court would now find the NEP unconstitutional-- whereas in 1980 the constitution had yet to be repatriated. Natural resources are a provincial matter.

NAFTA in any case prevents Canada from favouring Canada over the US and Mexico in energy supply, I believe. It is one, level, playing field. And Ontario in particular cannot leave NAFTA, it would devastate the economy.

For better or for worse, we are now in the same boat. Given the looming natural gas supply shortages in North America due to declining production, I for one am glad that we are building LNG terminals in New Brunswick (although that gas will flow south to the US, not West to Ontario).

Quebec has Hydro, but Ontario is in one, sweet mess when it comes to electric power supply (and also home heating). I am glad the government is emphasising conservation: if California can achieve no per capita gain in electricity consumption since 1980 (the rest of the US growth is about 40% in that time) then Ontario, too, can probably do a lot. (in California this is known as 'the Arthur Rosenfeld effect' after the energy commissioner who drove it through).

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