02/07/2012 05:14 EST | Updated 04/08/2012 05:12 EDT

Foreign Oil Reliance Risks 'Energy Poverty,' MPs Told

Atlantic Canadians are increasingly facing "energy poverty," an expert on energy security told a parliamentary committee Tuesday.

Prof. Larry Hughes, who leads Dalhousie University's Energy Research Group, says people in Atlantic Canada are vulnerable to price hikes because their oil is imported.

"What you are finding is the average cost to a household in Atlantic Canada is reaching an energy poverty level," said Hughes.

Hughes was testifying before the House of Commons natural resources committee, which is looking into the state of oil refineries and pipelines in Canada.

He explained that energy poverty exists when homeowners spend between eight to 10 per cent of their household income on energy costs. Some Atlantic Canadian provinces, such as P.E.I., are already averaging six per cent, because they heat their homes with oil.

Their energy costs are expensive when compared to the rest of Canadians, who have access to cheaper natural gas.

Hughes's testimony highlights the patchwork system of energy supply in Canada. Quebec and Atlantic Canada import most of their oil from the U.K., Norway, Nigeria and the Middle East. Ontario, however, uses a mix of imported and Western Canadian oil. In Manitoba and parts of Western Canada, the provinces and territories use domestically produced oil.

Focus on energy security

Hughes told the MPs on the committee that Canada needs to concentrate on its own energy security as imported oil supplies become more scarce and unstable.

"Energy availability is something we should be greatly concerned with for Atlantic Canada and Quebec, because most suppliers have either peaked or … are in politically volatile regions. We rely on Saudi Arabia for example," he said.

The Atlantic provinces used to get western oil through an Enbridge pipeline — called Line 9 — that went from Alberta to Montreal. It was built because of the energy crisis in the 1970s.

But in the 1990s it became cheaper to bring imported oil to the eastern half of the country, and part of that pipeline was reversed to carry imported oil westbound from Montreal to Sarnia, Ont.

Enbridge is now proposing to change the direction of a section of that pipeline again. Enbridge wants to reverse the portion between Sarnia and Westover, Ont., near Hamilton. It could eventually allow more of the line to carry western crude all the way to Montreal.

The oil could then travel from Montreal to Atlantic Canada, by tanker, or on to refineries in Portland, Maine and then back into the Atlantic region.

Hughes said that would be a good start. "It won't address the affordability but the crude oil will be available and those in need could get some form of subsidy."

Experts warn against energy subsidies

That plan to reverse the Enbridge line is getting support from leading economist Jack Mintz, of the University of Calgary's School of Public Policy, who also appeared before the committee.

"Just in terms of the economics, the pipeline … reversal can make sense at least in terms of providing more oil to Montreal and potentially the Atlantic area," Mintz told MPs.

But other energy experts, like the University of Calgary's Michal Moore, warned against any proposal that would include energy subsidies.

"When consumers look at energy they don't really care what the source is, they are fairly indifferent to that. But they are pretty responsive to cost and most of the time we find those costs are best reflected in a competitive industry," said Moore.