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PM Says Canada Will Up Oil Output to Stabilize Market in Katrina's Aftermath

Posted on: Friday, 2 September 2005, 15:00 CDT

SASKATOON (CP) - Prime Minister Paul Martin promised Friday that Canada will step up its oil production to help stabilize world markets that have seen prices skyrocket in the aftermath of hurricane Katrina.

Martin said Ottawa is responding to a plea from the International Energy Agency, which has asked 27 member countries to release reserves and, in the case of exporters such as Canada, increase output. "Canada, through the offices of the deputy prime minister and the minister of energy, will be saying that we are there and that we are prepared to do our part," said Martin.

"Canada is not an importer, we're an exporter, so for that reason we do not have reserves.

"So the question is are we going to be in a position to provide additional supplies and . . . we have checked across the country with the companies and the provinces . . . (and) we will be able to do so. The purpose of this is to stabilize the prices, to make sure there is in fact stability in the prices, at the same time as helping the Americans."

Martin stressed the aid will not come at the expense of Canadians, who are facing skryrocketing prices at the gas pumps.

"Our goal will be to help stabilize the existing situation, but not in a way that would pose any diminution of supply for Canadians," he said.

"The idea is in fact to stabilize the prices. The whole purpose of increasing the amount of oil that is on the market is directed to do the exact opposite. That is to make sure prices are stabilized."

Martin also said he wants to head down to tour the disaster area, but not until aid workers and officials have the situation in hand.

"I certainly do expect to go down at some point but I want to go down when it's appropriate.

"Obviously I think the better time is once Canadian aid is on the ground and is operating."

Martin's comments on oil production appeared to fly in the face of a position taken by Canada's oil producers and its top oil-producing province, Alberta.

Premier Ralph Klein said Thursday his province will do what it can to assist disaster-stricken residents of the U.S. Gulf Coast but can't send any more oil south.

"First of all, we don't own the oil and secondly our refineries are running at full capacity," Klein said.

"We're sending as much oil as we possibly can to accommodate the people in New Orleans. The pipeline capacity is very limited."

The Canadian Association of Petroleum Producers said Thursday that producers, refineries and pipeline operators have put off scheduled optional maintenance and shutdowns to keep the oil flowing at full capacity.

The Paris-based International Energy Agency is expected to release two million barrels of oil a day, with the U.S. contributing 44 per cent of that amount in crude from its Strategic Petroleum Reserve.

U.S. administration officials have said they hope the other 56 per cent would be in the form of gasoline now in European government stockpiles.

Fears of escalating fuel prices spread across the U.S. this week as damaged Gulf Coast refineries and fuel lines shut down.

It's estimated Katrina shut down 90 per cent of production facilities on the Gulf of Mexico.

On Thursday, U.S. President George W. Bush urged Americans to be prudent in their consumption of energy, but called the hurricane a "temporary disruption" to gasoline supplies.

Source: Canadian Press

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