Canada today responded to pressure from U.S. authorities by announcing an 11 percent cut in the price of natural gas exported to the United States.
The long-awaited decision reduced the export charge as of midnight to $4.40 per million British thermal units from $4.94.
The reduction is likely to be followed shortly by a system of discounts for American companies buying additional amounts of the fuel, Canadian Energy Minister Jean Chretien indicated today.
Such an incentive plan is "very attractive" and a decision on the proposal can be expected in about a month, Chretien said.
Although Canada supplies only 4 percent of the gas consumed in the United States, the controversy over rising prices and imminent deregulation of that fuel in the American market has generated heated discussion of Canadian exports.
In some states, Canadian gas has been selling for double the price of U.S.-produced supplies. Under pressure from consumers, the Reagan administration and Congress have been pressing the government of Canadian Prime Minister Pierre Elliot Trudeau to reduce its export price.
At the same time, higher prices have caused a partial loss of the U.S. market, with Canadian producers now supplying less than half of the volumes authorized for export to the United States by Canadian regulators. For this reason, the gas industry here has urged Ottawa to adopt a more flexible pricing system.
In a speech to the Chamber of Commerce in Calgary, Alberta, Chretien acknowledged that the slight reduction in Canada's export charge would not solve Canada's marketing problems in the United States. But he said the move was important as a signal that Ottawa is "willing to respond to international energy marketing conditions" and thereby shore up its sales position in the United States.
"I believe realistic objectives are to try to protect long-term revenues for Canada by preserving gas market share," he said.
In recent months, Canadian officials have resisted trimming Canada's export price on the grounds that such a move would fail to bring major increases in customers in the depressed U.S. gas market. But some officials believe that, if Canada can maintain its position in the American market, it stands to reap major sales later in the 1980s when, they believe, U.S. demand for gas again will exceed supply.
As world energy markets have weakened, many U.S. pipelines have invoked clauses in contracts allowing them to cancel delivery or are negotiating lower delivery levels with their Canadian suppliers.
Partly with future sales in mind, the Trudeau government continues to refuse to move away from an export pricing system set in 1980.
The terms of the Duncan-Lalonde Agreement (named for the two countries' energy ministers at that time) have not allowed Canadian gas export prices to drop in accordance with the U.S. gas surplus or the slide in international petroleum prices. However, Chretien, who discussed the issue in Washington last week with Energy Secretary Donald P. Hodel, said today that Canada's gas price henceforth would be more in line with the changing world market.