Canada's Battle for Oil (by Kaley Kennedy)

The subject of oil is a hot topic in this day in age. Between rising and falling gas prices, the controversy surrounding the oil in Iraq, and general panic relating to the oil shortage that is sure to arise in the near future, it is difficult to read the newspaper without the word appearing. Recently, even a domestic dispute has developed over the subject within Canada, climaxing with Premier Danny Williams of Newfoundland refusing to fly Canadian flags on Provincial Government land, and municipal governments in the province following suit. The battle is, essentially, over offshore oil revenues. Over the past few months there have been a number of talks between the Government of Newfoundland and Labrador, along with that of Nova Scotia with the intention of negotiating a new deal for these provinces in regards to the distribution of the revenue received from offshore oil in their coastal regions.

It is common knowledge that since the fall of the cod fishery within Newfoundland and Labrador, their economy has seen tough times. Instead of improving the condition of Newfoundland and Labrador’s economy, the success of their offshore oil has, in fact, contributed to the economic hardship befallen on Newfoundland. The Federal Government revokes approximately 70 cents from Newfoundland and Labrador’s Equalization Payments - payments given to the less fortunate provinces using taxes from the wealthier provinces - for every dollar that is made in offshore revenue.

Due to the extreme need of the economic revenue from the offshore oil programs as well as the Equalization Payments, the provincial government is adamant about receiving one hundred percent of the off shore oil revenues, without cuts being made to their Equalization Payments. Premier Williams even claims that this was promised to him in the Liberals’ June campaign: “The federal government has an excellent understanding of our province’s position and I will immediately sign any agreement that honours the commitment that was made to Newfoundland and Labrador on June 5 of this year.” The Prime Minister is denying the allegation that he is going back on a campaign promise, assuring the public that Williams understood that there would be restrictions on the new deal and that the proposed plan gives the Premier what he wants: “It is disappointing in the extreme that Premier Williams now rejects the very agreement he has sought for months.”

While it is true that in the most recent meetings, the Federal Government has made an appealing offer, at the same time, it requires a lot of sacrifices on the part of the Government of Newfoundland and Labrador. Premier Williams states, “This proposal prevents us from capitalizing on future discoveries which could potentially be found in the Orphan Basin and Laurentian Sub Basin.” The proposal puts the province at a disadvantage because should they want to continue with the program, they will be required to eliminate a $700 million deficit owed to them by the Federal Government. Furthermore, there are additional restrictions seeing drastic cuts made to the Equalization Payments the province will receive should its revenue exceed that of Ontario’s. To many, these conditions may seem reasonable, however, given the dire condition of the economy in Newfoundland and Labrador, they simply are not. Until there is sustainability and stability in the province’s economy, placing the proposed conditions on Newfoundland’s reception of offshore oil revenues could be disastrous.

The people of Newfoundland and Labrador have taken a firm stance on this issue, siding completely with their Premier. The people of Newfoundland and Labrador, like their Premier, are very firm in their beliefs regarding the disputed offshore oil revenues. In fact, Member of Parliament (MP) Bill Matthews stated, “If I am convinced at the end of the day that we have reneged, then I will have to seriously consider if I go back to the province and stay there, if I sit in the House of Commons where I sit, or what I will do, because this deal means that much to my province."

The deal means so much that a Newfoundlander living in Washington D.C. has launched an online letter writing campaign at http://www.fairdealfornewfoundland.com/. The Telegram, one of Newfoundland’s daily newspapers, reported that only two days after the sites creation it had already received fifty letters. There has been little resistance to the actions of the Provincial government, with the only widely reported protest being the flying of a Canadian flag by a judge in the province. Premier Williams has since announced that Canadian flags will continue to fly in front of courthouses, however, they will remain absent in all other provincial buildings.

It seems that the Federal Government has a large problem on their hands. This controversy has the potential to create even larger rifts between Canada’s provinces and see new challenges in maintaining Canada’s unity. Like Quebec, Newfoundland and Labrador is a region with a rich history of nationalism, as well as a long history of isolation and conflicts with the federal government. If the Federal Government does not begin to take the requests of the province seriously, the repercussions will not be so simple as a few flags folded away. Hopefully, however, seeing Canada’s history in dealing with domestic issues and emerging a stronger, more unified country, it is quite possible that benefits for both sides may arise from this whole ordeal. Until then, many flag poles in Newfoundland and Labrador will remain bare this winter.

Sources

A Fair Deal for Newfoundland and Labrador. 27 December 2004. 30 December 2004. <http://www.fairdealfornewfoundland.com/>.

“Deal for Newfoundland and Nova Scotia on offshore revenue may be near.” CBC News. 10 November 2004. 30 December 2004. <http://www.cbc.ca/story/canada/national/2004/11/10/offshore041110.html>.

“Federal offer on offshore revenues falls $1 billion short in first eight years alone.” Government of Newfoundland and Labrador. 23 December 2004. 30 December 2004. <http://www.gov.nl.ca/releases/2004/exec/1223n02.htm>.

Martin, Hon. Paul. “Statement by the Prime Minister on the negotiations with Newfoundland and Labrador.” Office of the Prime Minister. 23 December 2004. 30 December 2004. <http://www.pm.gc.ca/eng/news.asp?id=365>.

“Nfld. premier eases rhetoric, relaxes flag ban.” CBC News. 30 December 2004. 30 December 2004. <http://www.cbc.ca/story/canada/national/2004/12/30/nfld-flag-041230.html>.

“Nfld. premier says PM broke promise.” CBC News. 26 October 2004. 30 December 2004. <http://www.cbc.ca/story/canada/national/2004/10/26/williams041026.html>.

“Ottawa and St. John's had a deal: PM.” CBC News. 27 October 2004. 30 December 2004. <http://www.cbc.ca/story/canada/national/2004/10/27/martin_williams_oil041027.html>.

“PM agrees to new talks in offshore resources dispute.” CBC News. 8 November 2004. 30 December 2004. <http://www.cbc.ca/story/canada/national/2004/11/08/resources_041108.html>.

Roberts, Terry. “Online Campaign Launched.” The Telegram. 30 December 2004. 30 December 2004. <http://www.thetelegram.com/news.aspx?storyID=27022>.

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