OK, so Ottawa’s going to buy the Trans Mountain Pipeline for $4.5 billion and run it as a Crown corporation.
That’s a good start. (Caveats to follow.)
Theoretically, it could ensure transparency and accountability, even responsibility, to a business in which the private sector adamantly refuses to deliver any such thing.
Possibly, if there’s an actual economic case for building a pipeline, it’ll result in some of the line’s profit remaining in Canada to benefit Canadians, for example by helping to develop cleaner alternative energy technologies, instead of being piped directly to the United States to line the pockets of The Richest Man in Houston* and his fellow Texans at Kinder Morgan Inc.
As an aside, this raises the question of whether Ottawa is paying too much. That requires further analysis – I’ll get back to you about it sometime, maybe even before August when the deal is supposed to be done.
In the meantime, though, I’m sure you’ll have the opportunity to read a metric tonne of politically biased claims by supposedly non-partisan right-wing organizations that hate Prime Minister Justin Trudeau and his Liberal federal government, not to mention the Alberta NDP.
Another aside: This won’t make public opposition to the line’s expansion in Coastal British Columbia go away, although it may allow for proper application of the rule of law so the courts can proceed at their necessarily reasoned pace. It may even increase public confidence about the safety of petroleum export activities – surely a good thing if you’re a pipeline advocate from Alberta.
Potentially, federal ownership and operation of Trans Mountain and its expansion could provide Canada with a limited opportunity to manage the economic impact of the decline in the fossil fuel industry as the world tries to get its addiction to the sticky goo under control.
But it won’t be very effective if Ottawa sticks to the market fundamentalist ideological dogma that has dominated Canadian political discourse for decades and insists this is only a temporary measure and the line will be sold to some opaque and potentially environmentally irresponsible corporation as quickly as possible.
It certainly won’t be effective enough without a publicly owned national oil company to provide government influence of the market. Arguably, the creation of Petro-Canada in 1973 was the best NDP idea the Trudeau Liberals ever gave in to – the Pierre Trudeau Liberals, that is. Well, we all know how that ended. But that doesn’t alter the fact a country with a resource-dominated economy can’t have much control over its fate without a government hand in the resource sector.
The fact Petro-Canada was an NDP inspiration, built on an NDP bill reluctantly accepted by Pierre Trudeau’s government, may account for why the corporation was so swiftly abandoned, to Canada’s great disadvantage. After all, as Tommy Douglas famously pointed out to us mice, the difference between Liberals and Conservatives is no more than the difference between black cats and white cats. (This was before the NDP rebranded itself as the party for orange cats.)
According to the Globe and Mail, tut-tutting as if this were a bad thing, “the Liberal government’s move amounts to a nationalization of the critical pipeline project.” (Remember, nobody complains when other essential public infrastructure, like roads, are “nationalized.”)
Regardless, sticking to the taking points in his department’s press release, Finance Bill Morneau insisted yesterday “it is not the intention of the government of Canada to be a long-term owner of this project.” Well, it should be, and while they do own it, there is at least faint hope a wiser course could be charted, if only because no one else wants the thing.
For its part, KM will supposedly help Ottawa find a private buyer for the line, although one imagines its executives’ enthusiasm for that will wane once Ottawa’s cheque clears their bank.
The jubilant Alberta Government led by NDP Premier Rachel Notley said yesterday it is prepared to finance the deal to the tune of an additional $2 billion. “Alberta’s contribution would range from zero to a maximum of $2 billion, and would be payable only upon completion of the project,” its press release stated. “If Alberta’s backstop is called upon, Alberta will receive equity in the completed project.”
Yesterday’s announcement puts Canada’s “Conservative” opposition – which is not really conservative, but part of a radical market-fundamentalist internationalist ideological movement now apparently headquartered in Munich – in an uncomfortable spot.
They’ve been screaming for months that Justin Trudeau’s government simply must do something to ensure the completion of the $7.4-billion pipeline expansion megaproject. Now it has.
In addition, the federal and Alberta governments have called Alberta Opposition leader Jason Kenney’s bluff. Less than two months ago he was demanding the same thing. “I would be prepared in principle for the Alberta government to take an equity position in this project in the expansion of Trans Mountain, but if we do so, Ottawa has to be there with us,” the United Conservative Party leader said on April 8.
Of course, when it comes to talking points, modern Conservatives can turn on a dime. They had already done so yesterday before breakfast was cold. The decision is proof the government driving investors from Canada, the poodles of Thinktankistan and the fields of Astro-Turf were soon yapping along in unison.
“The message that is being sent to the world: that in order to get a big project built in this country, the federal government has to nationalize a huge aspect of it,” said federal Conservative Opposition Leader Andrew Scheer.
In reality, it’s the almighty market worshipped by Mr. Scheer’s party that’s driving investors away from petroleum. And the scamsters at KM are doubtless smirking, having profitably executed their exit strategy without a hitch.
Despite what Mr. Scheer says, corporations like Kinder Morgan want to do business in Canada because we have the rule of law, not in spite of it. They can hardly complain if they find the delays caused by the rule of law inconvenient. It’s part of the cost of doing business in a democratic federation, and accounting for that is a component of corporate competence. It’s not the rule of law if it just includes the bits that suit your interests!
Still, this may prove to be the best thing for Canada under the circumstances. Even though many Canadians are inclined to think it would not be a bad thing for a company that came up with a scheme like this to be allowed to fail or bear the cost of walking away, that’s too much to hope for in the face of a almost total elite consensus the project must be completed. This is probably true even if you don’t believe, as University of Calgary economist Trevor Tombe opined for the CBC yesterday, that the benefits of the pipeline outweigh the risks.
What would the whiny Mr. Scheer do? Declare the country to be a unitary state? Good luck with that!
On that note, let’s give the final word to Philippe Couillard, premier minstre of Quebec. “I hope we’ll no longer hear remarks in the rest of country about aid to Bombardier,” he was quoted saying yesterday.
That, alas, is asking too much of conservative politicians in Alberta.
* Thank you, Tzeporah Berman, for that one!
regarding this: ‘market fundamentalist ideological dogma that has dominated Canadian political discourse for decades’
EXCERPT: ‘The Overton window basically suggests that only a subset of all policy options are considered realistic at any one time.’
The choices the NDP thought they had, have been very effectively constrained by the propaganda for that dogma.
That narrow window of political options for the NDP… is discussed in Ricardo Acuna’s useful explanation of what’s happened to AB politics:
‘ A window on power and influence in Alberta politics
This week saw the publication of a new book entitled Alberta Oil and the Decline of Democracy in Canada. You can download the entire book for free from Athabasca University Press.’
http://albertalabour.blogspot.com/2015/10/a-window-on-power-and-influence-in.html
‘Ricardo Acuna’s “A Window on Power and Influence in Alberta Politics.” Acuna uses Joe Overton’s theory of the window of political possibility to examine how political discourse has been narrowed in Alberta. The Overton window basically suggests that only a subset of all policy options are considered realistic at any one time.’
http://aupress.ca/books/120251/ebook/11_Shrivastava_Stefanick_2015-Alberta_Oil_and_the_Decline_of_Democracy_in_Canada.pdf
Sam Gunsch wrote: “The choices the NDP thought they had, have been very effectively constrained by the propaganda for that dogma.”
Not sure I buy this excuse.
No one forced Notley to be a cheerleader for pipelines.
No one forced Notley to sign off on the oilsands expansion agenda.
No one forced Notley to prevent Canada from meeting its Paris targets.
No one forced Notley to renege on her promise to get Albertans a “fair share” in royalties.
No one forced Notley to break key campaign promises.
No one forced Notley to bully and threaten our neighbours.
These are all choices. Choices freely made. All reflecting poor judgment. Gross political miscalculation.
No evidence that these choices will win NDP re-election in 2019. Mathematically, it seems virtually impossible for the NDP to prevail against a united conservative party. Conservatives wouldn’t vote for Notley even if she built a billion pipelines.
Notley was always a one-term premier. Her job was to stand up to Big Oil, reject petro-politics, put AB on the right track, and show Albertans what principled progressive govt looks like.
Whether in chimerical pursuit of re-election or for some other reason, Notley chose to do the opposite.
The caterwauling on the right is absolutely hilarious this morning. All the right-wing members of the fraternity of the “Loyal Order of the Kenney”, including Postmedia head cheerleaders Rick Bell and Lorne Gunter, see the investment of the Trans Mountain pipeline as a bad deal for taxpayers. Please!
If Trudeau and Notley would have walked away from this investment deal, these same conservative sycophants would be charging the Alberta Legislature with tiki torches demanding the governments purchase the pipeline — a move Kenney supported in April, as Climenhaga noted. With $15B annually left on the table without a new pipeline to tidewater, this was a no-brainer for both Trudeau and Notley.
“Possibly, if there’s an actual economic case for building a pipeline, it’ll result in some of the line’s profit remaining in Canada to benefit Canadians, for example by helping to develop cleaner alternative energy technologies.”
Is there an economic case for making climate change worse instead of better?
Is there an economic case for putting Canada’s emissions targets out of reach for decades to come?
Is there an economic case for degrading our life support systems?
If so, there is something wrong with our economics.
An economic case can be made only if we discount the costs.
Voodoo economics.
If we have billions of tax dollars to throw at the fossil fuel industry, we have billions of dollars to invest in renewables. If we have billions of tax dollars to increase emissions, accelerate climate change, and boost fossil fuel pollution, we have billions of dollars to reduce emissions and invest in our sustainable future.
The only question is when we start. How much longer do we delay and obstruct?
Wealth that degrades our life-support systems is illusory.
When you’re in a hole, stop digging.
Thank you for your responses. Those lists of questions to be answered are the best I’ve seen, and include many points I had not personally thought of. First class thinking among all the hyperbole of the last few months, and especially the last day. Send them to Elizabeth May, who might make good use of them.
Geoffrey, I am looking at the AESO current supply and demand report Thursday morning 7:36 am. 34% of our power is coming from coal, 55% from natural gas, 2% from wind, the rest from hydro, biomass, and a coal fired plant in Montana. In Alberta we have 1445 MW of wind generation capacity, it was generating 172 MW when I looked or 12% of capacity. You suggest that we should spend $4 billion on renewables instead of an oil pipeline but renewables such as wind and solar at present require some other form of electrical generation as back up when the wind isn’t blowing or the sun shining. This becomes most evident in December or January when we are under an arctic high and the air mass is still and cold. It doesn’t matter how many windmills or solar panels you have in the middle of a -30 night with present technology you need fossils fuels to generate electricity. Besides, the financial return from an oil pipeline is much greater in the short term and the reality is that is what gets governments re-elected.
A few weeks ago one of David’s commenters (I am sorry, I don’t remember his/her name) posted a link to an article that discussed how Kinder Morgan had upped their profits by cutting back on maintenance costs. That caused me to feel a bit more apprehensive about the pipeline expansion.
I believe that decades of pipeline friendly governments have contributed to the problem we are now in. Just like the parent who keeps his child happy by not taking him for unpleasant dental work, pipeline friendly governments who looked the other way when leaks occurred have not been good for the pipeline industry.
We live in a technologically advanced world where we fly people halfway around the planet so routinely that it is considered risk free, but it seems we are unable to put oil in a pipe and and reliably pump it to a destination. I would argue that we could, if pipelines took safety as seriously as airlines do. Instead, pipeline MO seems to be pump until a failure occurs, then fix. (Want to fly on an airline that uses that business model?) The oil spilled is simply a loss of product, and a PR campaign may be necessary to deal with the environmental damage. Worse yet, pipeline friendly governments have allowed that business model to flourish, and we now find ourselves unable to build a new pipeline because the public has lost confidence in the industry.
I don’t know if the ‘Pipeline is national interest’ call is true, or just a mantra, but if it is in the national interest, thought does need to be given to entrusting such a project to a foreign company. There can be no doubt that the new pipeline’s ability to remain leak free will have a profound effect on building the next one. With the government running the pipeline, the definition of ‘successful operation’ will include remaining leak free as well as earning a profit.
I recall no significant spill on the existing Trans-Mountain line since its 1953 construction. There was that 100 (one-hundred) litre “spill” last week, an amount that would half-fill your average home refridgerator.
I’d like to see a buy back of all utilities! Energy, telecom, pipelines, ports, airports, and yes rail. What I want is contract management. Not ownership of the outsource. If our operators don’t perform? Kiss your profit good-bye! We should own all the underlying resources. The operators should be paying us or leaving. Simple.
First of all, I am not sure if I would use the word nationalize here, perhaps that is why you said sort of. Nationalize implies a somewhat unwilling seller forced to sell by the government, but I get the sense Kinder Morgan was really not that unwilling. I think they might be glad to leave Canada and our crazy seemingly never ending pipeline squabbles behind and take the money and run back to Texas, where they only need to worry about the things Americans are more used worrying about like wackos with guns.
In any event, I agree it may be better for the Federal government to own the pipeline than a private company given that issues around the pipeline are matters of considerable national public concern and debate already anyways. Canada also has a long history of government involvement in major projects such as Hibernia, the Oil sands and I think it has often worked out well for the country and has generally not been a bad investment.
I am sure the Conservative narrative will be that the pipeline is a bad investment or the government will lose money on it. I am not sure how much of the pessimism is just for political spin or based on their visceral dislike or skepticism of anything government does, but I suppose time will tell. I don’t think Kinder Morgan agreed to sell the pipeline because they thought it was a bad investment. Perhaps they do have other investment opportunities that are better, or the political and legal risk attached to this project was something that spooked them or they could not quantify it, or perhaps both. We think of Texas oilmen as being risk taking wildcatters, but in reality the people running pipeline companies are probably more like risk adverse MBA’s. Running a pipeline is somewhat like running a utility company, building a pipeline is quite different.
In the end, I think rule of law matters. It might have caused Kinder Morgan concern, but in the real world there is seldom “certainty”. This is why companies hire lawyers and have legal departments. There are inevitably legal issues and disputes that arise in the course of doing business. People have different opinions and interests and these get resolved through legal and political processes. The purchase of the pipeline was part of the political process for this issue, but the issue will still also be dealt with legally. I suspect the Government of Canada will be more patient and willing to deal with the legal side of the pipeline issue than a company from the US that was frustrated that things could just not be dictated here.
I believe that Andrew Scheer is embarassing himself. So is Jason Kenney.
I really do not like the thought of a Government doing this. But it is needed. Just as the huge investment in GM was needed. I think that Trudeau and Notley have done exactly the right thing. Had they not done this they would have been roundly criticized. This is a huge gamble for Trudeau. He knows that he will not pick up many seats in Alberta, if any, and will loose seats in BC. It could cost him the next election. Yet he went ahead with it. That takes guts.
The only difference seems to be the GM investment was made by a Conservative government and was directed to the benefit of Ontario and Quebec who have the mother load of seats on the House.
Certainly did not hear Kenney or Scheer criticizing the GM share purchase decision or the premature, ill timed stock sale prior to the last election. No, not a peep from either of them.
The silence of other Alberta Conservative MP’s is deafening.
As for Michelle Rempel’s silly comments about nationalization perhaps she should provide an alternative suggestion. She continues to embarrass herself when she speaks…..all with the goal of getting her name in the media in preparation for a potential run at the mayor’s chair when Nenshi retires. She won’t run before because she knows she will be reduced to a has been.