1 – We must first stop our current manufacturing jobs destruction policy : the dramatic jump in the value of the Canadian dollar against the US currency over the last four years.

Since January 2002 the Canadian dollar has climbed from 62.5 cents US to more than 86 cents US today, a 38% increase. There are two ways of looking at the significance of this appreciation – excluding other factors, the costs for Canadian industry have jumped 38% in US dollar terms or the sales revenue from export sales are now worth 38% less than they were a few years ago.

The main reason for this is the increase in the value of our exports of oil and natural gas. As a result the Canadian dollar is now viewed by many as a «petro-currency».

We export large quantities of natural gas to the US, more than 50% of our annual production, and have been doing so since the mid-1990s. While at one time this represented a substantial, but manageable export in dollar terms, it now represents a huge export since the price of natural gas has increased between 2 and 4 times in the last few years.

Canada is also a net exporter of crude oil and the value of crude has tripled over the last few years adding to this energy export surplus.

The tens of billions of dollars following into Canada from these exports has pushed up the value of our currency. Indeed the increase in the value of our dollar has more or less tracked the increase in the price of oil and gas.

And this trend will get worse. 100 billion dollars of projects have been announced to expand our exports of crude oil from the tar sands over the next ten years. So there is little prospect the value of our dollar will drop to a more reasonable level unless oil and gas prices collapse. 

What can we do about this?

First we must ask why Canada is exporting more than half its natural gas to the United States when we know we are running out of cheap conventional gas for ourselves?

Natural gas is the main feedstock for the petrochemical industry in Canada. In Ontario industrial users face shortages and already a plant in Sarnia is closing as a result. In Alberta another plant (Celanese) closed a year ago and a third faces imminent closure. The main reason is that we don’t have enough gas for them. For several years the industry association, the Canadian Chemical Producers Association, has complained it can barely get enough gas to run its existing facilities let alone expand them. Yet we would have plenty if we didn’t export more then half of it.