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HomePolicy Articles Article Summary

Back to Hewers of Wood and Drawers of Water: Energy, Trade, and the Demise of Petrochemicals in Alberta

Study by Terisa Turner, Diana Gibson

According to Terisa Turner and Diana Gibson, Canadians question why Canada traded its energy sovereignty with the North American Free Trade Agreement (NAFTA). In the authors’ view, the cost of these concessions has been costly for Canada because it can no longer manage the price or supply of natural gas or regulate its exports. As a result, the authors explain that oil and natural gas prices have been rising rapidly and fluctuating wildly, while conventional reserves are declining. Turner and Gibson contend that the price and supply changes are making an impact economy-wide and are also causing job losses.

This study focuses on Celanese, one of Alberta’s oldest petrochemical plants, which is closing its operations in Edmonton to relocate where production costs are cheaper. The authors correlate this closure to natural gas price and supply changes, then place it in the context of broader trends in the petrochemicals industry, and more generally, Alberta’s low level of value-added manufacturing. According to Turner and Gibson, the Alberta government has not recognized the interconnections between closures, lack of federal and provincial energy and industrial strategies, and the energy provisions stipulated under NAFTA. The authors contend the provincial government sees the Celanese closure as an isolated example and not reflective of the health of the Alberta petrochemicals industry. Turner and Gibson’s research, however, questions the industry’s future health. Furthermore, in the authors’ view, the Celanese plant close is not unique.

Turner and Gibson identify causal factors in the natural gas price and supply changes. For example, they suggest that NAFTA has dramatically reduced Albertans’ democratic control over non-renewable and declining energy resources. They discuss significant changes that have dramatically increased exports and reduced reserves. In the authors’ view, NAFTA has had numerous negative implications; the trend, however, may be toward further integration through an expansion of NAFTA (to include other countries) and through Canada’s “deep integration” with the US. Turner and Gibson also find fault with provincial policies, in particular, export and royalty policies in the petrochemical industry. The authors conclude: “Energy and industrial strategies are needed at both the provincial and national levels to manage competing demands and limited and falling reserves, and to plan for the future.” Further, they advocate that Canada “exit NAFTA’s energy provisions and secure the kind of control over its energy resources that Mexico and the U.S. have.” In their report, the authors provide a range of creative solutions for a renewed export strategy, environmental strategy, energy strategy, industrial strategy, and fiscal strategy.

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Policy Publication Details

Author(s): Terisa Turner; Diana Gibson;
Publisher: Parkland Institute [ Visit Website ]
Year Published: 2005; Publisher Type: Research Institute
Publicly Available: Yes Research Focus: International; National; Provincial;
Registration Required: No Language: English
Payment Required: No Publication Format: Adobe PDF

Subjects / Categories:

Policy Articles / Environment & Climate / Energy
Policy Articles / Environment & Climate / Natural Resources
Policy Articles / International Trade, Development & Finance / North American Free Trade Agreement
Policy Articles / Regional & Sectoral / Energy
Policy Articles / Regional & Sectoral / Oil & Gas
Policy Articles / Environment & Climate / Energy / 2005
Policy Articles / Environment & Climate / Natural Resources / 2005
Policy Articles / Regional & Sectoral / Energy / 2005
Policy Articles / Regional & Sectoral / Oil & Gas / 2005
Policy Articles / International Trade, Development & Finance / North American Free Trade Agreement / 2005
Policy Articles / Environment & Climate
Policy Articles / International Trade, Development & Finance
Policy Articles / Regional & Sectoral


Keywords / Tags:

Alberta; energy sovereignty; NAFTA; North American Free Trade Agreement; natural gas prices; natural gas supply; oil and natural gas prices; Celanese plant; petrochemical plants; Edmonton; petrochemical production costs; Alberta government; federal energy and industrial strategy; provincial energy and industrial strategy; democratic control; reduced reserves; non-renewable resources; petrochemical industry; export and royalty prices;