Being a Good neighbor.(COMMENTARY)

Article excerpt

Byline: Frank H. Murkowski, SPECIAL TO THE WASHINGTON TIMES

Canada's natural resources minister, Herb Dhaliwal, was in D.C. last week with a clear message for the United States Congress regarding our energy future - do as we say, not as we do.

Mr. Dhaliwal met with a number of my Senate colleagues trying to convince them that our national energy plan and its provisions to increase domestic energy production are bad for energy markets. Based on Canada's long history of incentives and tax credits to create more favorable market conditions, I am convinced Mr. Dhaliwal is not so much concerned about the U.S. energy bill's effect on energy markets, but the impact of U.S. energy development on Canada's profits.

While U.S.-Canadian relations are strong and fruitful, the U.S. should not allow anyone to derail our efforts to strengthen our energy security and further ensure national and hemispheric security.

If the U.S. can spur domestic energy production we can reduce our dangerous dependence on foreign sources of energy from places like Iraq, reducing the cash flow that keeps terrorists like Saddam Hussein in power. Our energy plan - the first in a generation - promotes conservation, encourages the use of advanced alternative fuels, and helps increase American energy supplies of all kinds.

The plan also includes federal provisions to help make a $20 billion pipeline linking Alaska's natural gas with markets in the Lower 48 part of our energy future. A unique tax credit I have offered creates a "safety net" for developers if the price of gas falls - and a payback provision if the price increases, ensuring the plan will not cost taxpayers.

The House-Senate energy bill also directs that the natural gas pipeline will follow a southern route from Alaska to the Lower 48, a route agreed to by treaty more than 25 years ago and strongly advocated by the Yukon government. Mr. Dhailiwal says Congress should not pre-empt market decisions, when in fact the decision to pursue the southern route has already been reached.

While Mr. Dhaliwal says these provisions are wrong, it is important to remember the billions of dollars in direct and indirect incentives to explore for oil and gas across Canada:

To encourage development of oil and gas off Eastern Canada in Hibernia, grants and tax exemptions total more than $285 million while loans and loan guarantees equal more than $2.5 billion. None of these tax credits are ever phased out, nor are they paid back to the taxpayer.

In the oil sands of Western Canada, all capital, exploration and development costs are deductible on a 25 percent declining basis with full royalty deductibility in place of the resource allowance. …