Peter Tertzakian of Studio.Energy with a photo of gas ration stamps in his office in Calgary, on Tuesday.Todd Korol/The Globe and Mail
In 1979, the world was jolted by an oil shock that emanated from Iran.
The crisis began when its oil exports were halted amid the Islamic revolution and ascension of Ayatollah Ruhollah Khomeini as Iran’s religious leader. Countries around the world were forced to confront surging prices for gasoline and, in some cases, oil shortages. Long lineups at U.S. gas stations were emblematic of the panic that gripped consumers during what was the second oil crisis of the 1970s.
Canadians did not suffer at the pumps to that extent, but that did not mean Ottawa was oblivious to the threat hitting the United States and the other G7 allies.
Forty-seven years on, with a new Middle East oil crisis roiling world economies, a discovery in the annals of Natural Resources Canada shows the government was preparing in 1979 for the unthinkable: gasoline rationing.
Peter Tertzakian, the Calgary-based economist, author and founder of Studio.Energy, had a glimpse into this alternate reality when he was alerted to sheets of stamps the government of the day had printed, though never put into circulation.
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Each stamp would give the bearer the right to buy 50 litres of gas.
“I’m a collector of obscurities as it relates to energy. So, knowing that, people in Ottawa pulled that out of a filing cabinet and shared it with me. I found it quite intriguing,” Mr. Tertzakian said. “The gas-rationing stamps were something of which Ottawa did a very limited run to create print proofs, but never actually did the big run to hand out to people.”
Under the plan, drivers could get their 50-litre allotment during shortages deemed moderate. In more severe cases, that would be reduced to 20 litres. Ambulances, freight carriers, farmers and other essential services would get priority.
In some ways, 1979 was a very different time for Canada as a producer and consumer of energy. The country pumped out about 1.5 million barrels of oil a day that year, compared with 5.3 million today. Exports to the U.S. now are nearly 15 times higher.
Much of today’s output is from the Alberta oil sands, a source that was essentially still an expensive science project in 1979. Gasoline sold for about 25 cents a litre that year, give or take a few pennies.
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But Mr. Tertzakian said the country still suffers from some of the same problems of half a century ago – particularly the reliance on imported oil in Eastern Canada. Refineries in Quebec and Atlantic Canada can access Western Canadian crude, but, because there is no direct pipeline, it is a complicated and costly endeavour that involves either rail or even tankers via the Panama Canal.
The Energy East pipeline would have extended to New Brunswick, but that proposal was cancelled in 2017.
“We export a lot more, but we don’t trade between provinces or supply the East – so that remains unchanged,” he said.
Since the U.S. and Israel began their war on Iran more than two weeks ago, oil prices have surged above US$100 a barrel as Iran cut off tanker traffic through the Strait of Hormuz. Normally, as much as a fifth of the world’s crude oil transits through that narrow Persian Gulf waterway.
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U.S. President Donald Trump and his administration have made frequently conflicting comments about how long the conflict will last, and how oil shipments could resume. That has kept oil markets on edge, and some analysts have predicted that a drawn-out war could push crude to US$200 a barrel for the first time.
As in 1979, the members of the International Energy Agency have been forced to act. That year, the members agreed to reduce oil demand by two million barrels a day, and it extended that austerity into 1980. Last week, the IEA countries agreed to put 400 million barrels into the market from their strategic reserves.
As a net exporter, Canada is not required to hold emergency stockpiles. But Energy and Natural Resources Minister Tim Hodgson said the industry will make an extra 23.6 million barrels available over the next three to six months, mostly through production and logistics tweaks.
Mr. Tertzakian is adamant that Canadians will not be forced to ration fuel, even though the country has not dealt with its long-standing vulnerabilities. “I don’t want some headline saying, ‘Peter pulls the fire alarm – get ready to queue up at the gas station.’”
“I’m just saying there is a precedent for being prepared to ration, which is what those stamps represent. And actually, if it gets a lot worse, then I do believe there’s going to be some thought given to how the demand side of this is going to go.”