Government must back off energy sector
Ottawa should limit its role to granting project approvals
Whether it’s coming from the right or the left, we should be wary of proposed government intervention in the economy under the guise of “helping” a certain industry. We should know by now that the economy is best helped by government staying out of the way.
When it comes to Alberta’s energy sector, there seems to be no shortage of interventionist ideas being thrown around. Many on the left want to ban or discourage bitumen exports, for example, all in the name of encouraging more “value-added” refining and upgrading jobs.
Now, some on the right are similarly proposing to ban or discourage exports, all in the name of encouraging more pipelines.
Neither approach is helpful or necessary. If there is an economic case to be made for new pipelines or additional refining or upgrading capacity, then the extent of the government’s role should be to grant its approval to those projects and ensure they’re completed. That’s it.
Last week, newly minted federal Conservative Leader Andrew Scheer reiterated in a Calgary radio interview his commitment to having national flags placed on gas pumps across the country. The flags would identify country of origin for the fuel. Scheer told News Talk 770’s Danielle Smith that the flags would remind motorists that “that there are out-of-work Canadians in our energy sector; there are projects on deck to be approved.”
Scheer says that, in turn, would generate “support from hard-working Canadians to buy our energy from Canada and get Canadians back to work.”
Of course, the primary objective of building a pipeline to the West Coast is to facilitate exports to Asia, thus lessening our reliance on exports to the American market. It, therefore, doesn’t displace any imported oil.
Energy East, of course, is still going through the approval process. If that pipeline can help supply Alberta oil to eastern refineries, then great. Let’s get that pipeline built. However, if Energy East ultimately takes some of that Alberta oil to the East Coast for export abroad, that’s fine, too.
Government shouldn’t stand in the way of exports, nor should it be dictating inputs to refineries and upgraders, most of which operate on rather thin profit margins as it is.
We should also keep in mind that by far the biggest source of imported foreign oil is the United States. That would be the same United States, by the way, that imposed mandatory country-of-origin labelling on Canadian meat products — a policy that we successfully fought against.
Meat labelling was rightly viewed as an unfair protectionist policy that needlessly imposed costs on industry. Let’s not make the same mistake here
A similar anti-import sentiment was expressed in a Wildrose motion that was debated in the Alberta legislature last month. Motion 505 would have the province push for federal support for pipelines within Canada to shift “Canada away from buying oil from countries with oppressive dictatorships.”
Wildrose MLA Prasad Panda says it would also urge the feds “to introduce legislation to phase out the import of what is essentially dictator oil.”
Again, if there’s an economic case to be made for having Canadian oil displace foreign oil, governments ought not stand in the way of the infrastructure that could facilitate that. But the “ethical” argument is odd here.
If it’s wrong to import oil from, say, Algeria, isn’t it also bad then to export oil to, say, refineries in China?
At a time when we’re poised to make progress on boosting exports through Keystone XL and the Trans Mountain expansion, it seems unwise and counter-productive to take aim at other oil exporting nations. We’d likely be quite concerned if the U.S. took the same steps Canada is being urged to take.
It’s encouraging that there are Canadian politicians willing to stand up and support new pipelines and the industry itself. This is the wrong way to demonstrate that, however.