Layton Proposes Export Tax on Oil to US

[August1991]

In response to the foot-dragging of the US government to remove counterveiling duties on softwood lumber imports, Jack Layton has proposed that Canada "retaliate" by imposing an export tax on oil and gas shipments to the US:

"There's been reference to retaliation; I see linkage (with other trade issues) is coming back onto the table," he said, referring to NDP Leader Jack Layton's suggestion Monday that Canada slap an export tax on oil and gas shipments.

CTV

Canada cannot influence the world price of oil and gas. Hence, it cannot influence the US domestic price. If the Canadian government imposed a tax on oil and gas exports, the burden of the tax would fall entirely on Canadian producers. We'd be taxing ourselves. (Or, more accurately, the federal government would be taxing Albertans.)

Either Layton's research staff is more incompetent than I imagined or Layton has decided to become an open demagogue.

[cybercoma]

In related news, the NDP Party has suggested giving Canadians a tax-credit to go towards building residential bomb shelters.

[Riverwind]

Either Layton's research staff is more incompetent than I imagined or Layton has decided to become an open demagogue.

The natural gas and electricity market is regional/continental instead of global. It is possible that Canada could affect the price in these areas. That said, I think it is a really dumb idea. There are other areas that could target equally influential lobby groups in Washington. I would thinking something directed at the film industry or agriculture. In any case, retaliation should be measured and adhere strictly to trade rules.

[August1991]

The natural gas and electricity market is regional/continental instead of global.

Layton's suggestion concerned oil and gas. Even the world gas market does not allow for great discrepancies.

If you know about any price differences in oil and gas, please PM me and I'll cut you in on the arbitrage profits. Promise.

[Riverwind]

Layton's suggestion concerned oil and gas.  Even the world gas market does not allow for great discrepancies.

I have heard news reports about the price of gas being different on the west coast than the east coast. I don't know how large the difference was are but I believe such differences exist since there is very limited capacity to ship natural gas anywhere where the price is high (unlike oil).

That said, there are players in the US that are investing heavily in LNG facilities that allow natural gas to be shipped from Russia and other places. Any 'Layton' maneuvers on the part of Canada would just speed up this process.

[August1991]

I was thinking the same thing - I began to wonder what arbitrage possibilities exist in the world gas market. (I know there's a large gas processing plant near Quebec City.)

Net electricity exports to the US have been declining because we have been importing so much.

In Canadian political terms, export taxes on electricity are a non-starter. For the asme reason, I think your suggestion of "film industry or agriculture" would go nowhere.

Curiously, Canada produces about 80% of the world's maple syrup and so we could influence the world price. I somehow think the threat of an export tax on maple syrup would look funny.

Overall, the best political solution (and best economic solution for Canada) would be for the Canadian government to form a softwood lumber quota system and then negotiate with Americans a voluntary restriction in exports. This would get the issue out of the newspapers and make everyone happy - except American consumers.

Maybe the Liberals don't want to solve this problem and prefer to keep it in the newspapers. It is politically useful to appear not to get along with the US.

[Bakunin]

Canada cannot influence the world price of oil and gas. Hence, it cannot influence the US domestic price. If the Canadian government imposed a tax on oil and gas exports, the burden of the tax would fall entirely on Canadian producers. We'd be taxing ourselves. (Or, more accurately, the federal government would be taxing Albertans.)

Either Layton's research staff is more incompetent than I imagined or Layton has decided to become an open demagogue.

This is right, not only its not federal business but by applying those tax on a free market will result in hurting our product competitiveness.

I only see one way to get rid of those american lobby, its to build our own lobby team in partner with construction company that buy woods, if we really want a war, we have to make it with other american against the lobby that declared us war and not against the whole country wich would be dumb, hurt us and give no good result. Even if we spend a few millions to build this team, if we consider we are loosing billions... it worth the money and time.

[Toro]

Layton's suggestion concerned oil and gas.  Even the world gas market does not allow for great discrepancies.

I have heard news reports about the price of gas being different on the west coast than the east coast. I don't know how large the difference was are but I believe such differences exist since there is very limited capacity to ship natural gas anywhere where the price is high (unlike oil).

That said, there are players in the US that are investing heavily in LNG facilities that allow natural gas to be shipped from Russia and other places. Any 'Layton' maneuvers on the part of Canada would just speed up this process.

<{POST_SNAPBACK}>

On arbitrage: There are price differences at different hubs and in different regions. The question is can you get it there? Of course, that's what the traders at Reliant, Duke, Aquila, Dynergy, etc. do.

There are four LNG terminals in America. There are proposals to build another 40. Current gas consumption in the US is about 63 tcf/d. LNG brings in just over 1. Those 40 would bring it up to 8. However, of those 40, they might build 8-12. Its more likely that they are built on the wilderness coast of Canada and piped down. Having said that, nat gas is pretty much a captive market. The problem is that utilities and industrial users would be encouraged to switch to other sources.

What Layton's proposal would do would be to cause a short-term price spike for some hydrocarbons. Its not smart long-term though it might make the Americans take notice. Its a pretty big card to play. And a dangerous one.

[mirror]

I thought this was already being discussed elsewhere.

[shoop]

You also have to remember that oil rigs themelsves are scarce resources.

If Layton's folly were to become reality, watch how quickly rigs head north to Alaska and south to Texas.

Buh bye Alberta boom.

But really what are the odds of Jack Layton ever becoming PM? Less than Harper, even in Mirror and THELIBERAL's fantasy worlds.

[mirror]

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[shoop]

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<{POST_SNAPBACK}>

??

[Toro]

!!!

[THELIBERAL]

Do any of you know how much oil we produce?

Do any of you know how much Alberta oil is shipped stateside?

Do any of you do any research before you start your Conservative ranting?

Do you all love cowering down to Uncle Sam?

PATHETIC!!!

[shoop]

Do any of you feel upset PM Dithers would try and appoint a separatist as GG?

Do any of you believe an adequate background check was performed?

Do any of you believe that Martin is still sticking by her?

PATHETIC

[Technocrat]

Why not... slap a huge export duty on gas and oil... then maybe... maybe the US might start doing something about softwood lumber... which has been going on for how many years... and the US has lost at every turn. At some point we have to stop being the US's Bitch and stand up for ourselves... decreasing the supply of oil to the states will surely get their attention and get the oil lobby on the side of canada for softwood. It may not be perfect but think how many thousands of jobs and billions of dollars we have lost so far on softwood. The US needs to know that trade agreements work both ways.

[Riverwind]

In response to the foot-dragging of the US government to remove counterveiling duties on softwood lumber imports, Jack Layton has proposed that Canada "retaliate" by imposing an export tax on oil and gas shipments to the US:

The front page of today's G&M says the gov't is thinking about slapping duties on Calfornia wine in retaliation. A much more measured response that, IMV, if more likely to persuade US lawmakers to change their minds.

[shoop]

The front page of today's G&M says the gov't is thinking about slapping duties on Calfornia wine in retaliation. A much more measured response that, IMV, if more likely to persuade US lawmakers to change their minds.

<{POST_SNAPBACK}>

Bravo sparhawk. Bravo.

An intelligent, measured response that shows the U.S. we are serious without shooting ourselves in the foot.

Too bad PM Dithers is apoplectic over the Michaelle Jean affair and incapable of action on the trade front.

[August1991]

A much more measured response that, IMV, if more likely to persuade US lawmakers to change their minds.

Yes, that makes much more sense.

Unfortunately, how much Californian wine does Canada buy? California only has two senators. How many congressional districts touch the Napa valley?

I recall in the "banana" dispute with Europe, the Americans threatened a tariff on French perfume.

Wine, perfume. High visibility items. Chosen for domestic political effect, perhaps.

[Toro]

Wine's shipped from Washington and Oregon too. What the government should be doing is slapping duties on goods from those states that are instigating this idiotic trade war. Maybe Canada should hit Microsoft with a tariff.

[Riverwind]

Wine's shipped from Washington and Oregon too.  What the government should be doing is slapping duties on goods from those states that are instigating this idiotic trade war.  Maybe Canada should hit Microsoft with a tariff.

That would be just dumb - computer s/w is a essential part of most businesses. Wine is a luxery item.

The when Europeans had the row over steel they put tariffs on Apple and Oranges (Florida and Oregon and important swing states). We could do the same.

[Shady]

Why not... slap a huge export duty on gas and oil... then maybe... maybe the US might start doing something about softwood lumber

Getting into a trade war with the United States would be about the dumbest thing Canada could do.

[Toro]

Wine's shipped from Washington and Oregon too.  What the government should be doing is slapping duties on goods from those states that are instigating this idiotic trade war.  Maybe Canada should hit Microsoft with a tariff.

That would be just dumb - computer s/w is a essential part of most businesses. Wine is a luxery item.

The when Europeans had the row over steel they put tariffs on Apple and Oranges (Florida and Oregon and important swing states). We could do the same.

<{POST_SNAPBACK}>

I agree that a trade war is dumb. But the point of hitting Microsoft is that Microsoft has more power in DC than the lumber industry. You want to have someone else in the ear of the senators from the Pacific northwest. Microsoft is it. Microsoft is more important than the wine industry.

[Riverwind]

I agree that a trade war is dumb.  But the point of hitting Microsoft is that Microsoft has more power in DC than the lumber industry.  You want to have someone else in the ear of the senators from the Pacific northwest.  Microsoft is it.  Microsoft is more important than the wine industry.

You want to get Microsoft's attention then start some programs to distribute Linux in public schools and exclude MS products from bids for gov't work. You don't need tariffs.

[Shady]

You don't need tariffs

Exactly. Tariffs only creat more tariffs. If you want American Industry to respond with the same type of action, then by all means, institute tariffs.