As the squabbling between British Columbia and Alberta over the proposed Gateway pipeline continues, perhaps a bigger issue will dawn on someone in the Prime Minister’s Office: the federal government needs to take more of a leadership role in developing Canada’s energy exports before Ottawa’s absence costs us our standard of living.

Since striking oil in Leduc, Alta., in 1947, Canada has been happy simply to send its oil and gas south while we take our natural energy advantage for granted. With the development of the western oilsands, that export activity has brought us into a demand-side monopoly, with our only major customer in a position to affect our future.

But with the progress the U.S. has made in recent years in developing its own domestic sources of oil and gas, our sole customer could become a competitor one day.

It should not have been a surprise last year that Ottawa developed a sudden interest in Asia when U.S. President Barack Obama decided not to rubber-stamp the Keystone pipeline. We may be able to take our oil and gas reserves for granted, but not our single customer.

Indeed, the delay of Keystone could be a blessing if it forces Canada to think about the future of its resources exports – oil and gas, in particular.

The problem is that our entire distribution system is geared toward the north-south movement of oil, leaving the eastern half of the country dependent on Venezuelan and Middle East oil.

So, now our eyes are turning to Asia and its voracious appetite for oil and gas. Our future standard of living could depend on it. The problem is: how do we get these resources to our new customers?

As a study by the Macdonald-Laurier Institute (MLI) notes, distribution will be key to the future of our oil and gas exports, and possibly to our standard of living.

Whether we like it or not, our holders of public office will be preoccupied with new pipeline infrastructure for many years. New infrastructure will be vital to keep our oil and gas exports competitive.

As the MLI study also noted, the current squabble between Alberta and B.C. is not likely to be the last provincial dispute over energy infrastructure. A mechanism is going to have to be found to resolve provincial disputes so that energy infrastructure development can proceed.

And as Jim Prentice, the former federal cabinet minister, recently warned while in Calgary: both Ottawa and the oil and gas sector are going to have to acknowledge the duty to consult when dealing with First Nations over environmental and other issues that could stand in the way of new pipelines.

So far, Ottawa seems loath to get involved in the Alberta/B.C. dispute but happy to push its way through environmental objections to Gateway or any other energy infrastructure.

And the federal government definitely is not interested in Alberta’s idea of a Canadian energy strategy. This may be because Ottawa is nervous of being pulled into a controversy like the one the Trudeau government faced in the 1980s over its ill-fated national energy policy (NEP).

As for the environmental issues, a country that took 38 years to approve the Mackenzie Valley natural gas pipeline obviously has a problem with overregulation on the environment.

But demonizing environmental critics, as the Feds have been doing for some time, won’t take the place of sound policy.

Canada is also going to have to acknowledge aboriginal nations’ rights to resources revenue. Otherwise, aboriginal-interest groups will have no incentive to go along with new oil and gas distribution systems.

And let’s not forget Eastern Canada. At some point, Eastern Canadians are going to wake up and realize they’re entitled to the benefit of this country’s huge energy reserves as much as the U.S. and Asia are. If Americans are entitled not to be dependent on the Middle East for energy, why not Eastern Canadians?

Regardless of any toxic memories of the NEP, Ottawa can’t continue to leave energy exports to the provinces to sort out. Otherwise, our future standard of living – and the future of Confederation – will be at stake.

We have allowed our biggest customer to set our energy policy. Let’s hope our next largest customer doesn’t do the same. IE

© 2012 Investment Executive. All rights reserved.