February 15, 1979

ENERGY-STEPS TO ENSURE ADEQUATE SUPPLY OF OIL TO EAST COAST REFINERIES

PC

Howard Edward Crosby

Progressive Conservative

Mr. Howard Crosby (Halifax-East Hants):

Mr. Speaker, on February 13 I asked the Minister of Energy, Mines and Resources (Mr. Gillespie) a rather simple and straightforward question, and I naively expected an equally straightforward answer. The pith and substance of my question was the situation with respect to oil supplies to east coast refineries in the light of rumours that these supplies would be cut back.

This question did not come out of the blue. Earlier I had introduced a motion under Standing Order 43 regarding whether cutbacks were likely. The minister had made several statements in the House in response to questions from hon. members on his side, and he had indicated on those occasions, and then again in response to my questions, that he had had negotiations with Mexican authorities with regard to Mexican oil. He also spoke of arrangements with Venezuela. However, he did not deal with the question of cutbacks in supplies of foreign crude oil, which crude oil is necessary for the operations of east coast refineries.

One might have thought as a result of the minister's responses that there indeed was at that point in time no effective cutback of supplies and no need for real concern on the part of residents on the east coast of Canada. However, almost 24 hours later we learned through the media and other sources that there were indeed cutbacks of oil supplies and that this was a very serious problem for east coast refineries. So, I stand here this evening to explain to the House the urgent and pressing nature of the energy problem on the east coast, and particularly in the province of Nova Scotia.

Nova Scotia has the highest energy costs in Canada as a result of the world situation respecting the price of oil. Our government in Nova Scotia failed to take action in the early 1970s when it became evident that the price of oil worldwide would escalate. This in turn goes back to a decision taken years before that Canadian oil would not be available beyond the Ottawa Valley line and, that those on the east coast would have to rely on the availability of foreign crude oil for their domestic needs, and to operate the refineries which were constructed at about that time on the east coast.

The government knew, or must have known, in 1970 that there would be a problem-but nothing was done-just as today the minister must know that there is going to continue to be an energy problem on the east coast arising from the

February 15, 1979

Adjournment Debate

reduction in the world supply of oil and the difficulties in the Middle East. I wanted to know what the minister has done about it. What he has told the House before and since is that certain arrangements had been made, and he mentioned an oil swap. He said that Canadian oil will be delivered to the central United States in return for their share of foreign crude oil available from the Middle East and other sources. But that oil swap has nothing to do with the minister. He did not take those steps.

Those arrangements were made among the international oil companies without any help or intervention from the minister, I suspect. The fact of the matter is that beyond those long range negotiations and the ordinary course of government activities, he has taken no steps to assure available and adequate supplies of oil for east coast refineries.

I wonder if the minister realizes and recognizes the serious effect of his inaction on the east coast. He has told us that he will get oil from Mexico. We read in the newspapers that the President of the U.S. is in the same place bidding for the same oil stocks. I have to ask: does this mean that we will engage in a Dutch auction with the United States for these dwindling oil stocks? If oil is available, what price are we going to pay for it? Will it be the worldwide price presently established by the OPEC nations, or will it be a premium price? I suspect that we will be paying a great deal more for our oil than we now are, and this in light of the fact, as I said, that in Nova Scotia we are paying one of the highest prices for energy in Canada.

My problem, and I am sure that of all Nova Scotians, is this: Several years ago we were told we would be paying $1 a gallon for gasoline, and many people would not believe it. Today, as a result of the inaction of the minister, we can look forward to paying $2 for a gallon of gasoline unless some immediate action is taken. What immediate action can be taken? The answer is obvious. We must look for alternative sources of energy. We have tremendous coal reserves in Nova Scotia which, if the minister would act now forcefully and quickly, could be developed so that they would be available, because the supply of Middle East oil is dwindling and will be dried up and gone. This is not a stable source, so we should not have to rely on it.

Like most Nova Scotians I am directly affected by this matter which is of prime and grave importance to us. I asked a question the other day in the House concerning the same matter. I wanted to know what action had been taken. I put the question to the Deputy Prime Minister (Mr. MacEachen), who is a great Nova Scotian, and who should know our problem. He preferred to fiddle with problems of parliamentary procedure while the oil refineries on the east coast burned for lack of oil.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   ENERGY-STEPS TO ENSURE ADEQUATE SUPPLY OF OIL TO EAST COAST REFINERIES
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LIB

Pierre Bussières (Parliamentary Secretary to the Minister of Energy, Mines and Resources; Parliamentary Secretary to the Minister of State for Science and Technology)

Liberal

Mr. Pierre Bussieres (Parliamentary Secretary to Minister of Energy, Mines and Resources and Minister of State for Science and Technology):

Mr. Speaker, I would like at the

outset to say to the hon. member that the Minister of Energy, Mines and Resources and Minister of State for Science and Technology (Mr. Gillespie) is very concerned, as is the government, not only since today but since the 1970's about the particular problem caused in eastern Canada by the oil crisis and he is also, if not more, sympathetic to the people of Nova Scotia than the people in all eastern Canada.

Very briefly, Mr. Speaker, I would like to recall certain facts about international crude oil supplies. We know that from October to December last there were sporadic interruptions in crude oil imports from Iran. We also know that since December 26 those imports of Iranian crude have come to a complete standstill. You must remember that Iranian crude oil in the world totalled 5 million barrels a day, or about 10 per cent of supplies in non-communist countries.

To make up for that shortage the other countries agreed to increase their production and crude exports. The present effects, on one hand, of the stoppage of Iranian exports and, on the other of higher exports by other oil-producing countries are basically this: the total amount of available crude in the world dropped by two to three million barrels a day, which is about a 4 to 6 per cent cutback in supply, not yet the critical point set by the international organization of oil-importing countries.

As concerns the situation in eastern Canada, I believe it is wrong to say that the minister and the government have done nothing. Mr. Speaker, if we go back to the events that I mentioned earlier, the crisis of the 70s, we can see all the phases we have gone through, all the steps that the government has taken to correct the situation. In my opinion the most outstanding aspect is that Canada's domestic price is different from the international price. This is because of the existence of a mechanism which allows adjustment of the prices. And we know this adjustment works.

Normally, we used to import 500,000 barrels of oil a day from Iran. We generally import 500,000 barrels a day. Of these 500,000 barrels, 100,000 or 20 per cent came from Iran. Following the reductions, our importers had some success in convincing other international crude suppliers to increase their supplies to offset this deficit.

It is quite obvious, Mr. Speaker, that there are unavoidable delays in exact accounting of the dates of delivery by internationals to Canadian importers. It is also quite obvious-and I believe that this is quite fundamental-that some delays are unavoidable if we are to provide accurate figures on the imports expected by refiners, which information must be communicated to the government.

However, we have seen that the Minister of Energy, Mines and Resources (Mr. Gillespie) did not spare any effort, to arrange for negotiations and to organize the exchange program which the hon. member mentioned, and that we can already feel the effectiveness of these measures.

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   ENERGY-STEPS TO ENSURE ADEQUATE SUPPLY OF OIL TO EAST COAST REFINERIES
Permalink
LIB

Gérald Laniel (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

Mr. Deputy Speaker:

The motion to adjourn the House is now deemed to have been adopted. Accordingly, this House stands adjourned until 2 p.m. tomorrow.

Motion agreed to and the House adjourned at 10.33 p.m.

Friday, February 16, 1979

Topic:   PROCEEDINGS ON ADJOURNMENT MOTION
Subtopic:   ENERGY-STEPS TO ENSURE ADEQUATE SUPPLY OF OIL TO EAST COAST REFINERIES
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February 15, 1979