Canada’s inability to affect world oil prices means we must lower our energy transportation costs
THE NEB HAS GREENLIGHTED THE
Trans Mountain pipeline, Alberta Premier Rachel Notley has finally gotten behind the project, and Prime Minister Justin Trudeau is relaxing on the B.C. oil tanker moratorium. Excellent.
Notley “tilted”—to use a Henry Kissinger term for real politik— on the Northern Gateway pipeline, came out swinging against the anti-oil sands activists in her own party, and pushed Trudeau to promote pipelines on his recent visit to Alberta—all in just one month. More music to industry ears.
As “The 200” list grimly showed last month, when oil is down revenue is down; and when revenue is down reality hammers on the door of those in power. An opposition, such as the Leap manifesto-fed brigade, can yelp and whine all it likes, but governments have to govern, which is hard to do when the well’s running dry. Notley and her energy minister Marg McCuaig-Boyd proudly sport Canada Action’s “I Love Oil Sands” t-shirts—in orange, of course. They know which end of a pipeline their social spending’s buttered on. They are pragmatists, and pragmatists can deliver in a way that ranters cannot.
In the short term, carbon pricing is a double-edged sword. For producers who weren’t investing in cutting emissions, the double whammy of increased carbon and corporate taxes comes at the wrong turn of the economic cycle. Drillers won’t welcome it either. But for service firms that sell cost-saving and carbon-cutting technology, it’s a boon. In the long term, combined with royalty incentives that reward lowering production costs, it greens up Alberta’s oil brand, boosts social license to get pipelines to tidewater, makes Canada’s crude globally competitive and its producers more innovative, and allows service firms to penetrate overseas markets.
Now back to those pipelines. Let’s hope that Trudeau takes action quickly. It looks as if he’s tilting too, but on the moratorium on oil tankers on B.C.’s northern coast. Reports after his mountain retreat meeting with Notley suggest his election stance, like hers, is now more flexible. And the Fort McMurray wildfire was a grim but timely reminder of where the feds get their money from. Trudeau is, after all, pro-pipeline, but with a softer strategy than his predecessor. He also dropped in to Saskatchewan to visit Premier Brad Wall, who’s been prodding him about pipelines but with a sharper stick.
Trudeau says the best way to build pipelines is through co-operation with communities and First Nations along their paths. He’s a consensus builder. But building support takes time and it’s not possible to be all things to all people. Trudeau has enough political capital from his environmental policies to get at least one pipeline built. There’s nothing Canada can do about world oil prices, which are determined by the power plays of Riyadh and Tehran. But we can lower our own transportation costs and gain access to global markets.