MORNEAU ADMITS WE’RE ‘TRUMPED.’
There is poignant irony in Jim Carr’s shuffle from the Ministry of Natural Resources to becoming minister of the newly renamed Department of International Trade Diversification. Had Carr pursued his original mandate, Canada could be on the way to significantly diversifying its trade, since facilitating pipeline projects to tidewater would open substantial markets in Asia and Europe for our oil and gas.
Instead, government hostility, regulatory impediments and outright rejection killed Enbridge’s $7.9-billion Northern Gateway project and TransCanada’s $15.7-billion Energy East project. It also forced the government to nationalize Kinder Morgan’s Trans Mountain pipeline expansion, although construction has yet to ramp up, protesters have already begun their civil disobedience campaign, and a critical Federal Court challenge by First Nations is pending. Canada loses between $15 billion and $20 billion annually or up to one per cent of GDP because pipeline constraints result in a steep price discount for our oil and gas sales to the U.S., even as that country exports oil and gas — be they domestic or imported — at higher international prices.
Canada trades over $2 billion a day of goods and services with the U.S. That trade represented 76 per cent of our exports and 20 per cent of our GDP last year. President Donald Trump’s “America First” rhetoric, and his tariffs on steel and aluminum, put into stark relief our vulnerability to American protectionism. The growing trade war has unnerved local and foreign investors, causing a capital outflow from Canada to the U.S., which may partly explain Trump’s NAFTA dilatory tactics.
Prime Minister Justin Trudeau now claims he takes seriously the need to diversify our trading markets, yet he gives short shrift to the most effective way to achieve that objective. Rather than shuffling chairs on the trade Titanic, Trudeau should change direction and embrace the enormous wealth contained in Canada’s vast oil and gas reserves. It would be faster, more certain and cost the government nothing if it simply liberated the private sector to invest capital, foster trade and pay more of the royalties and taxes that fund our critical social programs. Unfortunately, Trudeau’s jaundiced view of fossil fuels precludes that possibility.
Furthermore, despite all the fear mongering about apocalyptic global warming, the government will not meet its Paris climate accord commitments and cannot even marginally reduce global temperatures without sending Canada back to the Stone Age.
We will soon see whether the new minister of natural resources, Amarjeet Sohi, does his job and responsibly promotes the resource sector or, like his predecessor, willingly succumbs to the antidevelopment zealots in cabinet and the PMO. His first task should be to fundamentally revise the Impact Assessment Act, which creates so much risk and cost that no new major private-sector pipeline is likely to ever be built in Canada as long as the act remains. A failure to fix this problem would be proof positive the Liberal government intends to strand much of our vast resource wealth in pursuit of its unattainable green objectives. I doubt that Sohi will take up the fight for fossil fuels, but would love to be proven wrong.
The federal government is not alone in sacrificing our resource exports on the altar of environmental delusions. Several provinces are doing the same. Last month, Quebec Premier Philippe Couillard announced his government’s plan to ban hydraulic fracturing and almost any form of natural gas or oil exploration in Quebec, without any scientific or environmental rationale. Needless to say, this is devastating for the natural gas industry and its workers in Quebec.
In sharp contrast, America has become the largest producer of oil and gas in the world, largely due to fracking, with immense advantages for economic growth, jobs, its standard of living and national security. Western Canadians also benefitted enormously from using fracking technology safely for over 60 years.
The Quebec fracking ban will mean the province will increase natural gas imports from the U.S. (gas produced by fracking!) and slow the transition of electricity producers and others from coal to gas, which emits 40-percent fewer greenhouse gases. So Couillard’s pre-election ploy will harm his province’s economy as well as the global environment. It perfectly meets the definition of bad policy: One that is costly and undercuts its stated objective.
That brings us back to the federal government’s opposition to the development and transportation of oil and gas. It is painful to watch elected officials intentionally hinder exports and undermine Canada’s prosperity in pursuit of an environmental goal that science, economics and logic all demonstrate they cannot achieve. But today there are new realities that have made that approach even more harmful to our national well being, as Canada contends with a trade-fighting American president and signs of slower economic growth.
Diversifying oil and gas exports to energy-hungry overseas markets is the most effective way to reduce our dependency on the U.S. But that will only become a priority if Canada’s government puts its counter-productive green obsessions on the back burner and restores rationality to making decisions that are in Canada’s interests.
OIL AND GAS EXPORTS TO OVERSEAS MARKETS IS THE MOST EFFECTIVE WAY TO REDUCE OUR DEPENDENCY ON THE U.S.