NCPA - National Center for Policy Analysis

Canada Wants Free North American Energy Markets

May 15, 2002

Few Americans may be aware of it, but Canada is the largest energy supplier to the U.S. -- furnishing 15 percent of all natural gas consumption, and more crude and oil products than Saudi Arabia. In fact, Canada provides 9 percent of all the oil consumed in the U.S.

At a time when Congress is considering two major intrusions into natural gas markets, Canadian officials are urging the U.S. to stick with traditional market-based energy policy.

Our neighbor to the North points out that:

  • Both the House and Senate have intervened in private sector decision-making concerning the construction of a pipeline along a route through Alaska -- and would prohibit industry from considering a shorter, and perhaps cheaper, route under the Beaufort Sea with access to significant proven Canadian reserves.
  • The Senate has also approved loan guarantees of up to $10 billion for the pipeline.
  • Second, the Senate has approved a tax credit to guarantee a floor price for Alaskan gas -- which could result in a vast, open-ended U.S. taxpayer subsidy of tens of billions of dollars to producers of Alaskan gas.

Canada argues that artificially diminishing the large potential of Canadian gas imports will weaken U.S. energy security. And it urges Congress to abandon plans that depart from market principles by embracing subsidies.

Source: Michael Kergin (Canada's ambassador to the U.S.), "Trust the Market (and Canada)," Wall Street Journal, May 15, 2002.


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