Alberta Opposition United Conservative Party Leader Jason Kenney.

Jason Kenney, leader of Alberta’s Conservative Opposition party, must’ve struggled yesterday to keep a smirk off his face as he bloviated piously about Kinder Morgan Inc. President Steven Kean’s rumination the time may be nigh to pull the plug on the controversial Trans Mountain Pipeline Expansion Project that has the national knickers in a twist.

Alberta Premier Rachel Notley, a New Democrat, had just expressed her confidence everything was going swimmingly in the Alberta government’s negotiations with the Texas-based energy company to “reduce or eliminate investor risks” and ensure the controversial pipeline expansion to the B.C. Coast moves ahead.

Alberta Premier Rachel Notley

Premier Notley, Mr. Kenney declared smugly, “constantly had this tendency to declare victory when we’re further and further away from the certainty we need for this project.”

For his part, Mr. Kean mused that nothing has happened to change his mind about his company’s decision 10 days ago to stop spending any money on the $7.4-billion megaproject. It may be, he added, “untenable for a private party to undertake.” Ahem!

The timing of the remarks by the former executive of the bankrupt Enron Corp. was interesting, made almost simultaneously with the release of a poll suggesting a majority of Canadians has now come around to the idea The Pipeline Must be Built, thanks presumably to days of continual encouragement by a variety of actors with access to the media pulpit.

It could have been coincidence, of course. After all, Mr. Kean was speaking at a media conference call to discuss the company’s financial results. Still, the timing suggested a sense that now may be the moment for Kinder Morgan to apply a little more pressure on the federal and Alberta governments to come up with some cash, or even take the pipeline off his hands.

Conservative Calgary MP Michelle Rempel (Wikipedia Commons)

Perhaps Mr. Kean had been reading the New York Times, wherein economics columnist Paul Krugman makes a compelling case the end that is nigh is that of the Age of Almighty Oil.

“Believers in the primacy of fossil fuels … are now technological dead-enders,” wrote Dr. Krugman, who once won a Nobel Prize in economics. “There is no longer any reason to believe that it would be hard to drastically ‘decarbonize’ the economy. Indeed, there is no reason to believe that doing so would impose any significant economic cost.”

The lobbying goal of the fossil fuel industry, Dr. Krugman wrote, is no longer to stop the transition to renewable energy, merely “to slow things down, so they can extract as much profit as possible from their existing investments.”

If Dr. Krugman is right, that does not bode well for a project like the Trans Mountain Pipeline – whoever owns it. That may explain why Kinder Morgan is starting to act as if it would be just as happy if Edmonton and Ottawa would take the pipeline off its hands for a tidy profit, even if a majority of people in B.C. now support the project, as yesterday’s poll by the Angus Reid Institute also indicated.

Viva Hugo! Viva Cheson! Hasta la victoria siempre!

Meanwhile, here in Revolutionary Alberta the debate is growing more hysterical by the day, with Calgary Nose Hill MP Michelle Rempel comparing the Alberta NDP’s Bill 12, which would allow the province to turn off the gasoline tap to B.C. if it gets mad enough about that province’s NDP government’s lack of enthusiasm for the pipeline, to something the late lefty Venezuelan strongman Hugo Chavez would have gotten up to.

Kinder Morgan CEO Steven Kean (CBC)

Judging from her Tweet, Ms. Rempel didn’t seem to be aware either that President Chavez has been dead since 2013 or that Mr. Kenney, now the captain of her team’s local franchise, has been taking credit for Premier Notley’s policy.

“We do not want a socialist having consolidated power to control Alberta’s natural resources,” Ms. Rempel fumed, never mind that it’s the Constitution that gives the Notley Government such power, prompting general hilarity as Twitterists asked Mr. Kenney if he’s a socialist now.

I suspect that Ms. Rempel merely got to Mr. Kenney’s future strategy too soon.

he late Venezuelan president, Hugo Chavez (Wikimedia Commons)

All will be revealed in the fullness of time if she takes it easy. Mr. Kenney says right now he supports the idea of sinking federal and Alberta taxpayers’ money into a pipeline project for which the business case is controversial. But it’s easy to imagine him blaming a lousy investment on the NDP and the federal Liberals in a couple of years.

Indeed, this whole situation remains rife with potential for unintended consequences.

Committed environmentalists will certainly not be broken hearted if retail gasoline prices rise dramatically in B.C. That is as it should be, they will feel, if people are to be encouraged to drive with the environment in mind.

Thinking such thoughts may get you accused of being an “eco-terrorist” by Rick Orman, the oilpatch executive and former Tory cabinet minister who wants Prime Minister Justin Trudeau to send the Army to B.C., but we know from the study of economics that it’s likely to work as advertised – at least if prices get high enough.

Economist Paul Krugman (Lou Gold, The Guardian, Creative Commons)

Meanwhile, implementation of the bill’s provisions will also likely mightily displease fossil fuel shippers, which will win the Alberta NDP few friends in the business world – something that apparently matters to the party nowadays.

What’s more, if the pump price rises in B.C., it may well result in a tax windfall as B.C.’s NDP government – those “shitheads” Alberta NDP ministers are so angry at – take their percentage cut.

So another unintended consequence of Bill 12 could be a boost to the finances available to the B.C. NDP – which would be able to use the extra revenues to please their voters while blaming Alberta for their pain at the pumps.

It’s said here the NDP’s much-reviled and now apparently abandoned “social licence” strategy was working, and was the only strategy that had the potential to work in the long term.

It was never going to persuade every single British Columbian, but if you look at yesterday’s poll, it had the potential to convince enough.

Not, though, on the timetable both the Notley NDP and Prime Minister Justin Trudeau’s Liberals now seem to be trying to meet, with federal and Alberta elections looming next year.

It is time, perhaps, for Ms. Notley to start spending more energy explaining how her government is different from Mr. Kenney’s UCP, and less on how it’s the same!

This just in … Cyr to step aside

Bonnyville-Cold Lake MLA Scott Cyr has decided not to seek the UCP nomination in the redrawn Bonnyville-Cold-Lake-St. Paul riding, where he would have had to run off against Lac La Biche-St. Paul-Two Hills MLA David Hanson.

As is the zeitgeist, the former Wildrose MLA pulled the plug via social media, although he was vague about what his reasons might be. His parting words: “I am at one of those cross-roads in life and over the next couple of months will pray for direction, sit and discuss my future with my wife and daughters and continue working hard for our constituency of Bonnyville-Cold Lake as I have always done.”

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  1. In 2011, we Albertans were warned about the danger of our economy relying so heavily on oilsands/bitumen in the report of Stelmach’s ‘Premier’s Council for Economic Strategy’ Here:

    But the oil/gas/oilsands industry’s attack on Stelmach’s 2007 royalty review amounted to a political hit job that led to Stelmach’s resignation. And his 2011 committee’s report gathers dust.

    The NDP aren’t stupid. They got the point of the petro-industry’s Stelmach lesson for success in AB politics.

    Politics in AB by any party can’t escape the decades of industry/RW media/conservative(Klein) gov’t indoctrination that’s created a majority of AB citizens persuaded that the public good for AB is whatever the oil industry says it is.

    Citing Krugman is appropriate: the more AB’s economy continues to privilege oilsands, the more we head for the dead-end.

    “Believers in the primacy of fossil fuels … are now technological dead-enders,”

    Kevin Taft’s book published last fall provides a useful exposition of how AB got here:

    excerpt: ‘Taft is not the first author to criticize Alberta for being a willing hostage to the oil industry, but he doesn’t call the province a petrostate. He calls it an “oil deep state”: “Petrostates are conceived in petroleum, while oil deep states are captured by petroleum.”

    In other words, we had democracy in Alberta until we discovered oil.

    Taft’s argument is exhaustively researched and presented with a confidence that will irritate his critics. And there will be plenty of those.’

    1. Excellent point, Sam. We’ve been warned. Repeatedly. There’s a point at which someone is entitled to say, “if you can’t do the time, don’t do the crime.”

      1. For reference: Here’s a key paragraph of the warning in the Report of the Premier’s Council for Economic Strategy, 2011.

        page 6 excerpt: Alberta’s prosperity currently depends on the sale of energy
        to the U.S., and increasingly on oil sands as the source of that
        energy. The province is vulnerable as a result. We say this not
        because there is a danger of running out of raw materials –
        Alberta’s energy resources are massive – but because the
        production costs of heavy oil from oil sands are among the
        highest in the world, and because our reputation for orderly
        and responsible development is under attack.

        We must protect this revenue stream by addressing issues
        of cost and environmental impact. At the same time, we must
        plan for the eventuality that oil sands production will almost
        certainly be displaced at some point in the future by lower-
        cost and/or lower-emission alternatives. We may have heavy
        oil to sell, but few or no profitable markets wishing to buy.


        And with regard to the Premier’s Council warning on environmental impact, here’s the Auditor General in 2015, warning the GoA for the 2nd time in a decade about unfunded oilsands liabilities around cleaning up the oilsands tailings ponds:

        And Pembina Institute last year warning that oilsands tailings liabilities continue to grow and will for many more years under the Alberta Energy Regulator. (Which has been effectively captured by the industry as per many commentators such as Taft.)

        And reclamation so far? ‘Fifty years of oilsands equals only 0.1% of land reclaimed’

        As I’ve said before, why would anyone looking at the actual record of AB regulating its petro-industry believe any AB claims?

    2. I’m not sure that AB and Canada could get hosed any worse than this potential scenario?

      EXCERPT: ‘Duff Conacher, a founder of the civic organization Democracy Watch, called Kinder Morgan’s new May 31 deadline for resolving the conflict “an attempt at extorting a step forward” that should be rejected.

      “If the pipeline is such a great idea and it’s profitable, and if Kinder Morgan decides they are not going to build it, based on their completely artificial May 31 deadline, then presumably some other company will step up and build it,” Conacher pointed out in an interview.

      “Why should the government jump into the market on behalf of one company?”’

    3. How bad is Kinder Morgan that it induces a ‘once in a blue moon’ ? wherein CTF agrees with a democracy advocacy organization? AB really is captured by an Oil’s Deep State hysteria. No more evidence required.

      EXCERPT: ‘The appropriate timeline for a final decision about whether or not to proceed with the Kinder Morgan pipeline should be the timing of a legal ruling, Conacher said, and not Kinder Morgan’s self-serving corporate deadline.

      “If Kinder Morgan doesn’t like it then they can leave.”

      Wudrick said other foreign corporations are watching the unfolding pipeline drama closely.

      Canada needs to be a country that is welcoming to business, he said, adding that it is a very different matter and a “very expensive proposition” to subsidize businesses with public money.

      “It will only attract the wrong kinds of business, the businesses that are interested in sucking money out of government rather than trying to make money in the marketplace. ‘

  2. This post raises an interesting question: how much does fuel pricing influence people’s transportation decisions? Vancouver, for example, is a highly walkable city with an extensive and comprehensive transit system, in which driving is a choice. Higher fuel prices may therefore incentivize more people to leave their cars at home and use more environmentally friendly means to get to work or school. This is in fact one of the goals of a carbon price, and might eventually have a similar effect in Calgary and Edmonton.

    However, how does this factor operate in the BC Interior, or in that one-third of Alberta that lives outside our two big cities? I suspect all it does is make life more and more expensive, as the carbon tax is gradually ratcheted up to that $100/tonne level that economists say is needed for real measureable efficacy. The reason is simple: in smaller cities and rural areas, there is NO VIABLE ALTERNATIVE to using one’s private vehicle to get to and from work and all,of the others activities one engages in in daily life. Transit in such communities, when it even exists, is completely inadequate as an alternative to driving, and is more geared towards those segments of the populace that can’t drive or can’t own a car. On top of that, climate and road conditions, especially in the north, dictate the choice of vehicle type that is practical, and is skewed towards larger 4×4 or AWD vehicles, which are harder on fuel than small cars.

    1. I would agree Jerry, living in the country few viable alternatives exist. At present on the farm no viable alternatives exist to work my land other than fossil fuel powered equipment. We now have gps guided applicators that eliminate overlap and certainly minimize or eliminate wasted product while enhancing crop yield due to more accurate placement but we still depend on fossil fuels. I would certainly agree that C02 taxes penalize rural residents to a greater degree than urban residents!
      As for Kinder Morgan, it is becoming very obvious to me that the regulatory process and the political environment in Canada in certainly making it nearly impossible for any company to successfully complete a large O&G project. I have no doubt many people celebrate this turn of events but at some point it will come back and bite us in the butt. I can remember when Hugo Chavez was trotted out by those on the left as a glowing example of modern day socialism. Government is certainly necessary to provide certain services but it can reach a point where it becomes suffocating. Enjoy your day

    2. Jerry, you are certainly correct about the limited transit options in smaller centres, and there are certainly fewer viable alternatives to using private vehicles. Fortunately there are still some, however.

      The first step is to make people stop and think about how they want to travel, instead of automatically reaching for their car keys. I used to live and and teach in a town of 200 people. I once saw a woman drive from the grocery store to the post office – a distance of about 100 feet. During an extreme cold snap the manager of the grocery store told me it was too cold to start her truck to drive to work…so she walked. She lived about 2 blocks away. Really, the town was so small that a healthy person, without a load to carry, could easily walk from one location to another.

      Go to a larger centre, but still a town, say Provost or Claresholm, and it is still small enough that it is no big deal to ride a bike from one location to another. Really, given the lack of exercise options in smaller centres, doing so would be beneficial for more than the environment.

      Ride sharing is another possibility that can work. I remember one year when I was teaching the price of gas jumped significantly and two of our staff members who lived in an adjacent town immediately started car pooling.

      So, yes, the transit options aren’t there, but some alternatives are still possible. Hopefully a carbon tax will make people stop and think about the other possibilities.

      1. Of course, Mr Raynard, you’re right, and we do need to bring these policies forward to get where we need to be in climate change. But there is strong evidence that a carbon tax, while good policy, is bad politics, unpopular with voters, and there has also been little attention paid to date on how it affects residents outside of large metropolitan centres. To make this bitter but necessary medicine a bit more palatable, we need to see a bit more honey mixed in with it.

    3. No serious environmental group or citizens that take climate change seriously are calling for existing oil production and refining to be shut down tomorrow or even in the next 10 or 20 years.

      But we do need to stop expanding exploration and production if we in the West are actually serious about doing our part to transition off fossil fuels as the dominant energy source on a precautionary trajectory.

      All the issues around fossil fuels necessary for rural travel options and agriculture will have to be dealt with over decades.

      But options are being developed… e.g. Electric tractor trailer rigs are already a thing:

    4. Vancouver is also the home to Ballard Power Systems – and several electric car manufacturing start-ups.
      Notley’s choice to raise the price of her buggy whips would be a poor one.

  3. O, what a tangled web we weave when first we practice to deceive! ~ Sir Walter Scott (1771–1832)

    One of your more complicated pieces David. Makes my head spin.

    For those who suspect, as I do, that there is nothing new under the sun, here’s the full verse:

    Yet Clare’s sharp questions must I shun,
    Must separate Constance from the nun –
    Oh! what a tangled web we weave
    When first we practise to deceive!
    A Palmer too!- no wonder why
    I felt rebuked beneath his eye;
    I might have known there was but one
    Whose look could quell Lord Marmion.’
    ~Marmion, Canto 6

    Change a few names and titles and we have today’s story.

  4. All Governments the Federal and Provincial should get serious if they really think doomsday is coming with climate change and end the use of Fossil fuels today. Ahh but not the case is it. There’s money to be made here. It’s not Canada who will save the world because the two biggest nations in the world who spew out more climate killing toxins will never stop. Stock markets rule this world and that is what will be it’s downfall and no Carbon Tax will change that.

  5. When Trudeau first stated the Kinder Morgan pipeline expansion was in the national interest, I thought he should prove it was in the national interest by nationalizing it. Now I think the pipeline should not proceed and I think Kinder Morgan may have realized that with the need to reduce carbon emissions more oil production and transmission is not going to work when we have to get down to the serious business of reducing carbon emissions. Kinder Morgan may now be hoping governments will take the hit by buying them out. Socialize the costs while Kinder Morgan moves on the other more promising investments.

  6. Sir. always love your writing. One small point on your latest missive, the angus reid “poll” was an internet survey only, no relation to any actual poll that follows rules and has a margin of error. Oddly enough, CBC radio BC refused to mention that it was not an actual poll in their push to support the “national interest” and the federal government in general. Thanks again for your informative and clear writing, D MacDonald.

  7. …and another thing:

    HSBC Ditches New Coal, Tar Sands, and Offshore Arctic Drilling Projects

    According to Daniel Klier, group head of strategy and global head of sustainable finance at the financial giant, the bank recognizes “the need to reduce emissions rapidly to achieve the target set in the 2015 Paris Agreement to limit global temperatures rises to well below 2°C and our responsibility to support the communities in which we operate.”

    The changes are laid out in HSBC’s updated energy policy, which says it will no longer provide financial services for

    a) New coal-fired power plant projects, subject to very targeted exceptions of Bangladesh, Indonesia and Vietnam in order to appropriately balance local humanitarian needs with the need to transition to a low carbon economy. Consideration of any such exception is subject to: (i) independent analysis confirming the country has no reasonable alternative to coal; (ii) the plant’s carbon intensity being lower than 810g CO2/kWh; and (iii) financial close on the project being achieved by 31 December 2023
    b) New offshore oil or gas projects in the Arctic
    c) New greenfield oil sands projects
    d) New large dams for hydro-electric projects inconsistent with the World Commission on Dams Framework
    e) New nuclear projects inconsistent with the International Atomic Energy Agency (IAEA) standards

  8. Knowing Kinder Morgan’s C-suite backgrounds with Enron is bad enough, but learning about the company they keep is terrifying.

    Mears Canada VP Jason Edward Steph was jailed for bribing Nigerian officials to secure gas project

    “…coordinating the payment of bribes supports organized crime groups and corrupting officials… These matters have lasting impacts by creating a lack of trust between the public and the authorities and governments to serve them.”

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