The oil-rich Canadian province of Alberta threatened today to increase its crude oil prices to the world levels.
Threats were made by Alberta Premier Peter Lougheed, who said he would act unilaterally if the province failed to reach an agreement on the issue with the federal government in Ottawa.
"Within Alberta, people will pay the world price for oil fairly soon, and if other Canadians want to pay the price they can have some too," Lougheed was quoted today as saying after a speech to the Vancouver Board of Trade.
With its daily production of about 1.2 million barrels of crude, Alberta supplies roughly 90 percent of Canada's needs. The province is the principle producer of Canadian natural gas that includes exports to the United States worth about $4 billion annually.
Canadian oil sells domestically for $13.75 per barrel while the average world oil price now is about $22 per barrel.
Under Canadian statutes, Alberta owns all mineral rights on its soil and Lougheed would be within hs authority to increase Alberta wellhead prices. Export prices, however, are within the jurisdiction of the federal government in Ottawa. It also has discretionary powers to set the price for sales of Alberta oil outside the province.
Economists here said that the threatened increase would result in a 20 to 30 percent rise in retail prices. Canadians currently pay about $1 for a gallon of gas.
But the Conservative Alberta premier said he did not expect Prime Minister Joe Clark, who is also a Conservative from Alberta, to seek confrontation by exercising federal discretionary authority.
"I wouldn't go so far as to say that it (such action by Clark) would lead to a break up of confederation, but it would create some stresses and strains," Lougheed said.
His statement was seen by political observers in Ottawa as increasing pressure on the Clark government to accept Alberta oil producers' demands for raising the domestic crude prices to the world level gradually over the next year.
Lougheed also attacked the federal government over what many Albertans perceive as its foot-dragging on the province's request to export more natural gas to the United States. He said that a sharp increase in exports would be a more effective means of stopping capital outflow and attracting foreign investments than the current policy of increasing interest rates.