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Exploring Some Reasons Behind The High Energy Prices

In Canada, most are unaware that the National Energy Policy, or NEP, has been gutted in the advance of free trade. No longer can the Canadian government try to establish Canadian pricing for oil and gas that is manufactured, refined and sold in Canada. We completely ceded that ability when we signed onto NAFTA.

In 2003 I wrote an article about high gas prices in North America. Here we are on the cusp of 2007 and the price at the pump is vastly higher. This is not a surprising turn of events when we look at all the reasons for the high gas prices we are paying at the pump and on our heating bills.

The usual rational bandied about by people suffering under high prices is the idea that the oil and gas companies themselves are fixing the pricing system. If you ask ten people why gas prices are high the majority will find this as reason number one. But is it completely true?Most Canadians love to lay the blame of high gas prices on the taxes applied at the pump, and how the oil companies gouge the consumer but they and the media in Canada are overlooking the more important issues and causes for the price increases.

In Canada, most are unaware that the National Energy Policy, or NEP, has been gutted in the advance of free trade. No longer can the Canadian government try to establish Canadian pricing for oil and gas that is manufactured, refined and sold in Canada. We completely ceded that ability when we signed onto NAFTA.

What this means is that Canada now has little to no control over our own supplies and domestic pricing. During the free trade negotiations the Mexican negotiators had enough forethought to balk at the American proposal to write into law that both Canada and Mexico must hand over a full two thirds of all of our natural gas production. This leaves Canadians paying world market rates for something that they themselves export.

Right now Canada ships some two million barrels of oil a day south; yet we cannot do anything about setting national pricing structures, thanks to Mulroney and Chrétien and their free trade agreements.

This is not the whole story though. Even if we Canadians were to abrogate NAFTA which is our right under the agreement, we may have already given away too much of our dwindling resource.

In 1997 there were 41 large Canadian petroleum companies doing business in Canada. Today there are only six. Of the 35 that no longer exist, U.S. companies bought out 21. This is a disturbing trend of foreign takeovers of Canadian natural resources. Canadians no longer have a majority interest over their own energy resource base. Sadly, this is only going to get worse and never better. As more of Canada's energy resources are sold off to foreign corporations at 80 cents on the dollar with no democratic oversight whilst being coupled with an ever-shrinking resource, expect higher and higher prices.

Now couple this loss of domestic capacity and oversight with the burgeoning oil and gas use by many parts of the worldFree Articles, and we can easily foreshadow the ongoing energy crunch. The United States is still the world's largest user of oil and gas and there is little suggesting that they will change course on that issue any time soon. Not to be overlooked though is the upcoming powerhouse users of China and India. Both of those nations are undergoing their own industrial and economic revolutions. They will both demand more and more of the world's shortening supply only exacerbating the current situation. Add in Middle East turmoil and uncertainty as we see now and all bets are off as to just how high or how unstable pricing will be in 2007 and beyond.

Source: Free Articles from ArticlesFactory.com

ABOUT THE AUTHOR


Roy Whyte is an executive officer with WhiteBark Innovations and is the current editor of FUP - Software and Technology News and Soft News Canada



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