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Lethbridge Herald Newspaper Archives

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Lethbridge Herald, The (Newspaper) - September 10, 1973, Lethbridge, Alberta 1R _ THE LETHBRIDGE HERALD Monday, September 10. 1973 EATON'S EATON'S FALL Super Secret HOSIERY SALE! WEEK-LONG Tall Girl Panti Hose I .20 Pair V Pair O.OU Dress sheer, 15 denier mesh leg, 40 denier reinforced panti and toe. Colors: Tender Beige, Giace Taupe, Shadow Black and Navy. One size fits 5' 7" and over. Secret Dress Sheer Panti Hose 1.20 Pair 3 Pair 3.50 15 denier mesh leg, 40 denier reinforced panti and toe. Colors: Tender Beige, 'jlace Taupe. Shadow Navy, Black. One size fits all 165 Ibs to 210 Ibs. Secret All Nude Panti Hose I Pair O Pair w.OU Plain knit 20 denier. Sandalfoot. Colors: Tender Beige, Glace Taupe, Charcoal. White, Black and Navy. Sizes: A, 95 to 130 Ibs, B, 130 to 165 Ibs. Secret Dress Sheer Panti Hose 1.20 Par 3 Pair 3.50 15 denier mesh leg, 40 denier reinforced panti and toe. Colors: Tender Beige, Giace Taupe, Shadow Navy and Black. One size fits all, 165 Ibs to 210 Ibs. Secret Non Run Knee Highs- 71 Pair 6 Pair 4.10 Sandalfoot. Colors: Black, Mocha, Tender Beige, Cocoa, Glace Taupe. One size fits 9 to 11. Hosiery, Main Floor EATON'S Shop Eaton's Tuesday a.m. to p.m. Buy Line 328-8811. Use Your Eaton's Charge Account Credit Terms Available. Trudeau's new oil policy Its effects may not be felt for some time By ARCH MacKENZIE OTTAWA (CP) The provinces, the foreign- dominated petroleum industry and the United States are to be consulted on the abruptly- announced new petroleum policy designed by the govern- ment to supply the country with its own oil. Higher prices will also be sought some later, the large natural gas sales to the U.S. under ex- isting long-term contracts, say informed sources. What probably is only the first round of talks with the in- dustry, mainly -U.S.-owned, and the provincial premiers, is scheduled to be completed by Sept. 22, or the end of September at the latest, of- ficials say. But it may be a long time before the new policy takes full effect. That is indicated by the existing complexities and the length of time it took to implement the policy being three years before official proclamation in 1961. Senior officials in various departments are suggesting privately that within the next year the government will be forced to tackle the long-term natural gas contracts with the U.S. to obtain a far better price than originally contracted for. TACKS POSSIBLE Contract provision exists for such renegotiation but none has been attempted yet despite the fact, for example, that Algeria and other less- friendly nations are selling the U.S. frozen natural gas at prices far above the contracts with this country. U.S. natural gas demand is virtually un- limited. Some officials say the premature resignation recent- ly of Dr. Robert E. Howland as chairman of the National Energy Board reflects the problem of renegotiating these contracts and the fact that no successor has been lound after a search of some months. The energy board is the regulatory agency that sets gas export prices, among other responsibilities. Prime Minister Trudeau's statement Tuesday asked the petroleum industry to set its own tive-month freeze on Western Canada crude through to its to discuss a price-fixing mechanism in- sulating consumers against rising international prices. That would be a legislated two-price higher export prices in line with world levels but a lower domestic price to keep con- sumers happier. The Trudeau statement also resurrected the old concept of supplying Quebec and the Atlantic provinces with Western Canada crude oil. Proposed anew is a time the exten- sion of an existing one via the U.S. to Sarnia and Toron- the price is a sharp reduction in the amount of oil sold to the U.S. at premium prices by the major oil com- panies, most of which are U.S. owned. They own the pipeline. BIG REDUCTION Envisioned is a project costing perhaps million barrels of crude oil daily to Montreal, with a perhaps in sales to the U.S. from that pipeline. The pipeline proposal is a direct reversal of the 1961 National Oil Policy establish- ed by the Progressive Conser- vative government of the day. Alberta oil then lacked outlets and the decision was made to promote exports to the U.S. and feed the country only as far east as the Ottawa Valley with domestic oil. Cheaper Middle East and Venezuela oil continued to supply Quebec and the Atlan- tic provinces. Why the change, so suddenly? Public remarks by the prime minister and Energy Minister Donald Mac- donald, and private conversa- tion with senior federal of- ficials, form the official reply: Rising consumer discontent aboiut steep increases in gas- Dline and home heating oil, combined with the assumption 'hat international prices won't ;top rising. Mr Macdonald :as said that U.S. prices will je even higher. Therefore, profits by the 'oreign-dominated Western Canada oil industry on sales to he high-priced U.S. market, iragging up the Canadian iomestic price, have to be evelled off. FACE PROBLEM And Eastern Canadian dependence on imported oil, once cheap and now perhaps more expensive than Cana- dian oil with no end in sight, has to be dealt with. Mr. Macdonald mentioned the once-cheap oil imported by Quebec and the Atlantic provinces, now costing so much from price-militant Middle East states and said he'd had so many people ask, in effect: "How is it that we have so much oil in this country and yet we are im- porting so much and im- porting at other people's In terms of crude oil. the new policy means wrenching a whole con- of pipeline and refineries into a new rather than mostly But federal officials regard that as easier to achieve than, say, the withdrawal of natural gas 'supplies to U.S. areas where that supply may vir- tually be 100 per cent of the total for areas such as Minnesota. That makes the natural gas question much more complex than crude oil, they say. Western Canada now ex- ports about 1.1 million barrels daily or more of crude oil to the U.S. SITUATION IRONIC The irony is that Canada fought tooth and nail to get that U.S. entry through Interprovincial Pipeline Ltd. since 1961. signing a secret agreement in 1967 to reach the rich Chicago market. Louisiana and Texas interests fought the increased access bitterly, as they did some increases in natural gas imports from Canada. When Prime Minister Trudeau made his first of- ficial visit to Washington in the spring of 1969, he was still fighting for more exports of Western Canadian oil. No dates have been set ap- parently for talks with the- U.S. about the anticipated oil export cut or the natural gas price increase. Mr. Mac- donald has said he might visit Washington at the same time he goes to Venezuela to dis- cuss security of supply. But if Interprovincial Pipeline Ltd. through the U.S. is to be used to boost shipments to Montreal, then U.S. approval will be required from the Federal Power Com- mission, U.S. equivalent of the energy board. What the industry thinks... This assessment of the federal government's changes in oil policy was written for The Canadian Press by Carl 0. Nickle of Calgary, retired publisher of the Daily Oil Bulletin and now president of a Canadian-owned exploration and production company. Written for The Canadian Press B} CARL O. NICKLE The minority Liberal government came out with a so-called anti-inflation program this week, aimed at keeping NDP support and perhaps pleasing some voters. The package consisted of a iederal subsidy to hold down consumer costs of bread and milk, while keeping farmers and dairymen happy with competitive world prices. Another item was a boost in family allowances. Then came the kicker: a single product, petroleum, of the host of raw materials and manufactured goods in Canada, was singled out for "price control That move, perhaps politically astute for the short term in today's Ot- tawa, was stupid, d i s criminatory, damaging to the c o u n t r y and quite c a p a b 1 e un1e s s quickly adding energy shortages as well as higher energy costs to the Canada of tomorrow. Let's examine the three points on oil control announc- ed by the prime minister: oil industry will be asked to refrain from further price increases to Canadian consumers before Jan. 30, 1974." But Quebec and the Maritimes are totally depen- dent on oil and products from overseas and because of policies set by present and previous governments. Ot- tawa cannot control the cost ol the 800.000 barrels daily of imports. the Arab countries and Nigeria- main progressively increasing taxes and roy- alties In addition, world monetary and demand factors have been raising tanker tran- sport costs. The cost of imports will definitely rise again belore next Jan. 30. Ottawa will cither have to subsidize Eastern consumers at the ex- pense of all Canadians or ac- tivate a clause in Prime Minister Trudeau's announce- ment that "this price restraint would apply except where, to the satisfaction of the minister of energy, the increase in cost of imported crude oil warrants a Canadian price increase." government intends to seek a control mechanism whereby higher prices in the United States market would not. automatically increase prices at home in Canada. An export tax or national oil marketing board are two possible control mechanisms. Discussion will be held as soon as possible with provinces and industry prior to introduction of legislation." That plan is so lull of holes no legislation could be passed without riding roughshod over the legitimate interests of a n a d a i s Western oil provinces and the host of investors who have put billions of dollars into finding and providing oil. Such a policy, if adopted, would swing new investment away irom Canada's remaining huge oil potential, guarantee domestic shortages in years ahead and greater de- pendence on unstable and ever more costly foreign oil sources. The Alberta, Saskatchewan and British Columbia govern- ments are principal owners of Western mineral rights and provincial fortunes rise or fall with the success or failure of oil and gas exploration and value of production. A federal export tax would cut field values below competitive worth, transfer huge sums to the federal treasury at the ex- pense of lost royalty and development income to the provinces and ol those who have taken capital risks. The short-term beneficiary would bo Ontario, which uses Cana- dian oil The loser would be the West A national oil marketing board would presumably use something other than an ex- port tax. but any of its moves to restrict Held values below competitive worth would rob the West to the benefit of the East. There would be Western objections, especially since the Trudeau government is leaving wide open, subject to cost increases based on world competitive conditions am! payroll, all raw and manufac- tured products of Canada other than oil. Oil-price control might be more acceptable if all prices and wages were controlled, but that would be politically unacceptable and economical- ly dangerous for Canada. Only the politician, who calls for a lid on all wages and a freeze on prices of Eastern-made cars, television sets, steel products, clothing, zinc, copper, iron, paper products and all other commodities, can support a qontrol- on oil without earning a charge of discrimination. Strangely enough, the Trudeau government recently produced a two-volume sur- vey called Energy Phase 1 to better inform Canadians on energy matters Government experts correctly forecast that world and Canadian energy costs must rise to en- sure supply. They pointed out that Alberta's huge Athabasca oil sands, the Arctic and Atlantic frontiers, synthetic1 gas or oil from coal and exotic long-term energy sources re- quire prices at source in current dollars up to double existing prices for Western Canadian oil and gas. Any Ottawa denial ot up- ward price adjustments to competitive levels, if it leads to tears ol a permanent "two- pnce structure, would kill oil planned massive investments in oil sands and frontiers. II it loses the1 pre- sent lead time. Canada is cer- tain to lace increasing shor- tages even belore the end ol this decade and will be at the iticrcv nl Arab producers in the 1980s. While Canada's energy potential is huge, proved reserves now being drawn Irom Western Canada will peak out in less than five years Only expanded investment, in amounts staggering the imagination, can ensure plenty for the future. Such investment re- quires profit to sustain it and oil-price control would provide just the opposite. government will also hold early consultations with provinces and industry on extension of pipeline facilities so as to enable Cana- dian oil to be shipped into Montreal Mr. Trudeau add- ed that at a time of rapidly increasing international prices, this would put Cana- dian oil into competition with international oil and would give additional security against international disrup- tion of supply. Ottawa is far too late with this proposal and the format indicated is far different from the concept pressed by Western Canadian oil men for many years. Trudeau implies that the "price-basing point" lor Western oil should be shifted east to Montreal refineries instead of present points of competition in .southwestern Ontario and the US, Great Lakes. The prac- tical effect would be to reduce the competitive worth of Western Canada oil by as much as 50 cents a barrel, another huge subsidy by the West to support Central Canada In this connection, the writer, as president of the Independent Petroleum Association of Canada met with the Ottawa cabinet in May. 1969. and cor- rect Iv forecast trends of oil supply and demands lor the 1970s and events thai have since occurred overseas to raise world prices. IPAC presented a formula to increase oil-supply security lor Quebec, essentially an ex- tension ol the Alberta pipeline Irom Toronto to Montreal Delivering oil to Montreal from the Ontario terminal of Interprovincial would involve boosting the pipeline facilities between Chicago and Sarnia. SEE NO PROBLEM Official confronting talks with the U.S. say that American concern about Canadian security of supply has been a consistent theme going as far back as the early therefore the U.S. will not likely object to facing a cut in Canadian supplies of oil. Any cut would be over three or more years. They say the U.S. became increasingly worried about having to supply Eastern Canada, dependent on im- ports, in the event that some emergency interrupted sea- borne shipments. Therefore, the plan to push Western Canada oil into Quebec and the Atlantic provinces should be acceptable in Washington. But there appears to be agreement that trying to raise natural gas contract prices is a more difficult matter. There is no ready agreement among assorted departments such as external affairs, finance, energy or trade and com- merce on whether such a price increase application means trading off concessions on old and contentious issues such as the auto pact. Senior officials see no problem in persuading Interprovincial Pipeline Ltd., as the main crude oil carrier in Canada and for export, to extend its facilities as far as Montreal. Since it is owned by the major oil companies such as Imperial Oil Ltd., they say, it has at its disposal what Mr. Macdonald has called large windfall profits from the 1973 increase in petroleum prices. Nor. say the officials, do they see any real resistance from industry as a whole to what the government is proposing. They suggest that these re- quests are bland in the ex- treme compared with the way the large petroleum com- panies have been treated recently by the newly-militant Middle East oil nations. That treatment includes nationalization, record petroleum royalty demands and other stiff conditions for continued production. with the price-basing point remaining in Ontario. A blend of Western and foreign oil would have added an es- timated one cent a gallon to Quebec sosts. DECLINED BY OTTAWA Ottawa said "no" in 1969 and literally left the West no alternative except to expand exports to the U.S. That achieved a pipeline-refinery pattern that cajinot be readily wrecked without seriously hurting U.S.-Canadian relations. Montreal cannot be added to the supply chain without building a new trans- port system. This would take three years. Successive federal govern- ments and Eastern consumers have made their choices over many years. The West was told to sell its oil south of the border. That pattern should not be disrupted if it means doing so by making the West foot the bill by selling resources below value. If Ottawa applies long-term sense instead of short-term political expediency, it will abandon its "one-product price control" plan, recognize that energy costs all over the world must rise, and build a Canadian energy policy around economic realities. Speedy development of the Alberta oils sands. Arctic frontiers and Atlantic coastal basins is essential so that all Canadians can, in reasonably tew years, be assured of long- term security of supply at costs far less than will otherwise be imposed by the greed ol overseas oil countries who now possess 75 per cent of the world's proved reserves. Meanwhile, if Ottawa wants consumer costs cut. why not reduce the 2.8-ccnts-a-gallon sales tax? If E a s t c r n provinces want consumers to save, why not trim gasoline taxes, now costing up to 22 cents a gallon'' The burden of taxes tar exceeds the average peiiny-a-gnllon net realized by Hie industry that takes the risks ;