West Coast oil line leads Canadian energy debate

Sun Apr 10, 2011 10:35am EDT
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By Jeffrey Jones

CALGARY, Alberta (Reuters) - A battle over a C$5.5 billion ($5.7 billion) oil pipeline to the West Coast and oil sands tax policy have led a thorny debate over energy and the environment early in Canada's election campaign.

Canada has become the biggest energy exporter to the United States with its oil sands the main supply, prompting Conservative Prime Minister Stephen Harper to tout the country as an emerging energy superpower.

It's a been double-edged sword. The industry has helped Canada's economy withstand some of the worst effects of the recession. But the unconventional crude is the target of environmentalists at home and abroad concerned about high greenhouse gas emissions and the impact of development on the water and wilderness of northeastern Alberta.

The campaign leading up to the May 2 vote has shown deep divisions over energy policy. As usual, energy threatens a political rift between oil-producing Alberta, Harper's Conservative power base, and the rest of Canada.

"Therein lies one of the problems -- as soon as you mention the words national, energy and policy, you create a reaction to what happened in the early 1980s," said Tim Marchant, professor at the University of Calgary's Haskayne School of Business.

Former Liberal Prime Minister Pierre Trudeau launched his protectionist National Energy Program in 1980, imposing a low domestic oil price and earning the wrath of Albertans.

"So, we need to find a different form of words to move that forward," Marchant said.

One major issue is whether to tap oil markets in Asia as a way to boost prices for land-locked crude production that currently is exported almost solely to the United States.   Continued...

<p>Conservative leader and Canada's Prime Minister Stephen Harper unveils his party's platform during a campaign event in Mississauga, Ontario April 8, 2011. REUTERS/Chris Wattie</p>