Prospects for Cooperation and Trade of Energy Resources Between the United States and Canada

ID-80-2: Published: Nov 8, 1979. Publicly Released: Nov 8, 1979.

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Because Canada and the United States are each other's largest trading partner, occupy the same continent, and share a stake in the future of Western democracies, the interdependencies have expanded into the area of energy. In March 1979, the two countries agreed to deal cooperatively with mutual energy problems. The Canadian Government, in cooperation with private industry, began to be concerned with energy problems long before the 1973 Arab oil embargo. A National Energy Board was established in 1959, and 2 years later a national oil policy was formulated to assist in the development of western Canadian oil. The pressure of increasing U.S. demand on Canadian supplies forced the Canadian Government to begin controlling exports in March 1973. In 1976, the Canadians published "An Energy Strategy for Canada" which established goals to: (1) raise domestic oil and natural gas prices toward world levels; (2) increase exploration and development activity; (3) establish a conservation program; (4) maintain natural gas self-sufficiency; and (5) educate the public. From 1973 to 1978 Canada supplied the United States with about 5 percent of its total gas supply. However, questions of continued supply are imminent since most licenses to export to the United States expire in the mid-to-late 1980s.

The actions taken by Canada in implementing its National Energy Plan have resulted in the conservation of resources, increased exploration and development, and increased supplies. Canada presently enjoys a surplus natural gas situation because reserves have grown faster than domestic demand. Canada's conventional oil reserves, on the other hand, are relatively small, and it has become more restrictive in its oil exports in the past few years. Therefore, as a source of crude oil in the near future, Canada is not the solution to the continuing U.S. dependence on oil imported from the Organization of Petroleum Exporting Countries. Because of the close economic, security, and political interrelations between the United States and Canada, the energy initiatives taken by Canada may be of interest to Congress and the executive branch in implementing the U.S. energy plan.

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