Ontario benefits from our energy
All Canadians benefit from a healthy oil and gas sector. There are employment opportunities that otherwise wouldn’t exist, the dollar is stronger, which means companies can better afford to invest in new machinery to increase productivity and the federal government’s trade balance is healthy.
And yet it seems Alberta can’t win.
It’s like the guest everyone wants to invite to a party — because of what it brings to the table — but then so many rules and conditions are applied the invited guest doesn’t feel all that welcome.
The latest chapter in this unfortunate story came this week when the Ontario energy minister weighed in on TransCanada’s recently announced Energy East pipeline project that would convert its natural gas line to one carrying oil, from West to East.
Once again, not unlike British Columbia Premier Christy Clark and Federal NDP leader Tom Mulcair before, Ontario’s energy minister, Bob Chiarelli, said he was concerned oil sent through the pipe — the tarsands, he said, to be more precise — would go solely for export, meaning Ontario would only serve as the conduit and not derive any economic benefit.
But Ontario’s energy minister doesn’t seem to have connected these dots. Perhaps its time he — like some other politicians in the country — had a crash course on federalism.
Chiarelli seems to forget the federal equalization formula means Ontario gets money from Alberta — with Ottawa as the middleman — to fund Ontario’s programs and services through transfer payments.
It was precisely this point Saskatchewan Premier Brad Wall made to reporters on Friday.
Wall made the connection between resource sector activity in Saskatchewan and its contribution to funding equalization payments to other provinces across the country. But he didn’t stop there. “People in Saskatchewan see a lot of trains going by full of cars that are made in Ontario. We’ve never asked for our cut of the Ontario taxes that are derived from those cars that go through, and neither should we,” he said.
Ontario — like the rest of the country — has more than benefited from Alberta’s robust energy sector.
Anyone interested in looking at what happens to a country’s balance of trade if a primary cog in its economy slows down should look across the pond to the United Kingdom.
Oil production from the prolific North Sea has fallen precipitously since 2008, which, in turn, has had a direct impact on the U.K.’s trade deficit.
Numbers released this week show oil and natural gas production from that region could fall as much as 22 per cent, to 1.2 million barrels per day 2013 — the largest on record.
There is a small amount of irony in the fact one of the baggage carousels at Toronto international airport circulates a non-stop message stating “Energy Keeps Canada Moving.”
It does. Let’s start with the fact the unemployment rate in Ontario is higher than the national average of 7.2 per cent, sitting at an unenviable 7.6 per cent according to the July numbers, while Alberta’s is at five per cent.
On a weekly basis there are flights between Ontario and Alberta — to those socalled tarsands — in northeastern Alberta.
These individuals benefit from being employed, thereby providing for their families and paying taxes into Ontario and federal coffers. If that isn’t enough, it’s projected Alberta’s oilsands producers will generate $63 billion in economic activity in Ontario over the next 25 years.
Given that Ontario is not exactly in the prosperous position it long held, it’s not a stretch to conclude these days that every penny helps.
Earlier this year, Chiarelli’s Ontario colleague, Finance Minister Charles Sousa, tabled a budget showing a provincial deficit of more than $11 billion.
Don’t forget, too, that many pension and mutual funds are invested in TransCanada shares; if the company can increase returns to shareholders through taking advantage of existing infrastructure and marrying it with a pressing need, that’s undoubtedly good for its share price — and that’s good for investors.
Given the continued uncertainty over whether the Keystone XL pipeline will be approved by U.S. President Barack Obama — a strategically placed sign in one of the towns in Martha’s Vineyard last week urged him not to approve the project — by pursuing another option to add value to its existing infrastructure, TransCanada is engaging in prudent risk diversification.
Surely Chiarelli has seen the figures in terms of what the Canadian economy is losing because of the discounted price being received for oil produced in this country because we only sell to one market.
At least Chiarelli understands that ultimate approval of the TransCanada project is in the hands of the federal government, which is admittedly one step ahead of Christy Clark.
On Friday, the Alberta government released the long-awaited pipeline safety report. While it was never going to satisfy all critics, its conclusion was that Alberta’s regulatory system, which oversees 400,000 kilometres of pipe, is strong and stacks up well against other jurisdictions within Canada, the United States and overseas.
“I think we are setting a very strong standard and I hope it’s a standard that speaks to all Canadians and everyone else in North America as well about our values of being very strongly attached to high performing pipeline systems,” Energy Minister Ken Hughes said.
Will Friday’s report be enough for those determined to oppose pipeline development? No. But nor should it be dismissed out of hand because of perceived shortcomings. Hughes clearly said companies who didn’t comply with the regulations would find it very hard to do business in Alberta.
There’s a fine balance in setting a regulatory system; it needs to encourage investment in a safe, sustainable and responsible manner.
But too much regulation, as Winston Churchill once said, destroys all respect for the law.
One might say Alberta has done rather well in striking that balance — to the benefit of Albertans and Canadians. It’s high time this was finally acknowledged, not derided.