There was never any doubt the tax-payer would have to foot the bill for Alberta Premier Peter Lougheed’s decision to cut back oil production in retaliation for Ottawa’s low-price energy policies. It was just a question of how Energy Minister Marc Lalonde would get his point across. Last week, on the eve of Lougheed’s production cut, Lalonde convinced an already hawkish federal cabinet to heat up the energy war by imposing a “Lougheed levy” of half-a-cent a litre, applied to gasoline and heating oil. His strategy was obvious. “We want to identify the source,” a Lalonde strategist conceded.
Lalonde was scheduled to announce the levy in Parliament Monday, with prices at the pump to change within 24 hours. The proceeds will defray the $130 million it will cost Ottawa annually to replace Lougheed’s cutback of 60,000 barrels a day with imported crude oil. Lalonde promises to add the same half-cent levy should Lougheed follow through on his promise to up the ante by making two further cuts of 60,000 barrels on June 1 and Sept. 1. Together, these three half-cent levies, coupled with the special levy oil consumers may have to pay to finance Petro-Canada’s take-over of Petrofina Canada, could add up to 5.5 cents to a litre of gasoline and heating oil by this fall.
Lalonde’s moves are not entirely political. He could have chosen to cool the
rhetoric by folding the new costs into the bloated Oil Import Compensation Program. But that would add about $400 million a year to a program that cost Canadians a staggering $3.2 billion in 1980. These subsidies to Quebec and Maritime refineries are the cost of maintaining a single price for Canadian oil when the price of domestic oil is $17.75 a barrel, while the average price paid for that third of Canadian oil needs filled by imports runs to $42 a barrel. The irony is that this one-price system was designed to encourage Canadian “unity.”
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