Alberta Politics
Natural Resources Minister Amarjeet Sohi (Photo: David J. Climenhaga).

Nothing has changed since February except that Canada now really does own the Trans Mountain Pipeline – so keep it public!

Posted on July 26, 2018, 1:41 am
5 mins

If the Trans Mountain Pipeline is so essential to the economic wellbeing of Canada and the price of Alberta bitumen is going to rise dramatically as a result of our ability to get that stuff to “tidewater,” why the heck is the federal government, having paid a premium to buy the thing, in such a hurry to unload it?

Seriously? I mean, we all know that nowadays all federal parties are lousy with neoliberals who unjustifiably disdain the ability of governments to do things better than profit-motivated private corporations – despite plenty of evidence that this is so. Not only that, but many of us are so propagandized by the relentlessly peddled fantasies of market fundamentalism that the idea of a nation taking on a task of national importance makes us feel hinky.

Prime Minister Justin Trudeau (Photo: David J. Climenhaga).

Notwithstanding all that, Ottawa’s new point man on the project, Natural Resources Minister Amarjeet Sohi, seems to be in an indecent hurry to dump the pipeline project, for which we Canadians have just paid Texas-based Kinder-Morgan Inc. $4.5 billion.

If the former Edmonton city councillor appointed to his new federal cabinet post by Liberal Prime Minister Justin Trudeau earlier this month succeeds with that objective, I’m sorry to have to advise you, we’re all almost certainly going to take a bath, metaphorically speaking.

When government spokespeople say they have no interest in hanging onto the thing, even if it’s the government that ends up spending the additional $7-billion plus to complete the expansion project, sharp corporate buyers are bound to smell the blood in the water.

So it’s said here it’s time for Mr. Sohi and his fellow Liberals to take a breath and leave the pipeline where it belongs, under direct public ownership, or at least as a Crown corporation, as befits a major national public works program of strategic importance to the national economy.

Those of you conditioned to assume this is crazy need to take a breath too. Back in February when I first wrote public ownership was the only way to square the circle of massive opposition to the project on the West Coast and the elite consensus in Edmonton and Ottawa that it must be built, even insiders within Alberta’s NDP government thought I was, if not completely nuts, certainly going over the top for rhetorical effect.

So they’ve told me. And yet here we are!

Nothing fundamental has changed since I wrote “if an expanded pipeline capable of carrying diluted bitumen from north central Alberta to the West Coast is essential to the health of the national economy, and the survival of Alberta’s, then the federal government should build it and run it.”

I argued then that would, or at least could:

  • Reassure both British Columbians and Albertans, including Indigenous peoples, regardless of their points of view on the specifics of the project.
  • Ensure meaningful financial and environmental accountability, impossible with a commercial corporation.
  • Protect good jobs, with fair wages, and adequate staffing to protect the environment along the way and on the coast.
  • Holistically include environmental and coastal protections in the overall scope of the project without the temptation to cut safety corners to pad the bottom line.
  • Restore to our national government partial influence over an essential industry it lost when it foolishly privatized Petro-Canada.
  • Reassure Canadians outside Alberta this isn’t just a boondoggle to enrich a few well-placed corporate bosses in other countries.
  • Possibly even ensure our oil sands activities did not trash our climate commitments under the Paris Agreement and international climate change measures yet to come.

Plus, if those wonderful predictions about the “Asian premium” are true, it will make money for us all.

And without a doubt, handing the pipeline back to the private sector will re-energize the West Coast environmental movement to redouble its efforts to stop the pipeline.

That’s because for-profit corporations are simply not capable of putting the needs of Canadians and Canada’s environment before short-term profit. It’s a feature of the capitalist system, not (as they say) a bug.

13 Comments to: Nothing has changed since February except that Canada now really does own the Trans Mountain Pipeline – so keep it public!

  1. the salamander

    July 26th, 2018

    .. I laugh almost hysterically when media says ‘Justin Trudeau bought the pipeline’.. he did not. ‘We bought a pipeline.. yes Canadian taxpayers. As such we need to know if ‘we’ also aquired the liabilities of the entity and any requirements to remediate environmental damage. It seems Albertans and Canadians will end up on the hook to ‘clean up’ the tar sands tailing ponds and any downwind or downstream toxicity thereof. Alberta’s Premier suggested she would to like the province to have a stake in the enterprise ! Including any risks ?

    The article link below may be a proverbial pail of cold water.. re the rainbow unicorn of opening up the vast Asian markets to Alberta Dilbit. No its not Alberta Oil, nor is is oil, nor is it traditional heavy oil.. it is a synthetic blend approx 30% highly refined diluent mixed with bitumin – a very granular product you could squeeze into a black ‘snowball’ and throw.. Thus we have Dilbit – often quoted as WCS Western Canada Select – Pretending Dilbit is unfairly ‘discounted’ Alberta Oil whose premium value will soar once leaving BC ‘tidewater’ and risking The Hecate Strait, Asia bound. Is that like shipping Alberta beef Sirloin to Asia and it becomes Tenderloin ? Like it transfoms into Brent or West Texas Intermediate ‘benchmark value ?

    The article may be the best roundup re Dilbit prospects I have come across.. Ms Notely & Justin, Kenney too .. should have a gander. I understand new international rules or laws re fuel for ships are arriving.. which will also have an impact.. these re the various polluting chemicals or levels to be allowed in fuel for shipping. I do hear with proper coking, Dilbit is useful for making asphalt ! Whether that equals Energy Security For Canadians.. or Nation Building, is uncertain though

    https://www.nationalobserver.com/2018/03/07/opinion/fatal-flaw-albertas-oil-expansion

    Reply
  2. Ron

    July 26th, 2018

    “the price of Alberta bitumen is going to rise dramatically as a result of our ability to get that stuff to “tidewater,””

    Ya, as basic Econ 101: the increase in supply always results in higher prices*

    (Sarcasm alert)

    Great deal for Texas oil barons
    bay deal for Canadians taxpayers and all humans on planet

    Ship solid bitumen bricks by rail, refine at home OR just leave it in the ground … there is plenty of conventional oil around.

    Reply
    • Jerrymacgp

      July 29th, 2018

      @Ron: I think the economic argument for shipping bitumen overseas to Asian and other non-US markets, is that the price that is realized for the product might be increased by having more buyers bidding it up. Right now, the only market is the US, which is also a competitor in that same market. Whether this idea bears out or is just a pipe dream (pun intended lol) will be known in the fullness of time, after the pipeline is built and dilbit is flowing. But the rationale is there, and is not at all unreasonable from an economic perspective.

      Reply
  3. J.E. Molnar

    July 26th, 2018

    What’s preventing the Alberta government from purchasing and owning the pipeline?

    If the government issued “bonds” to Albertans for a stake in ownership, it could help defray the government’s capital cost of the project. Research reveals “Victory Bonds” and “War Saving Certificates” were successful financial instruments during previous times of war. By providing purchasers of the bonds with a guaranteed yield (a decent ROI), $$$millions could be raised and control of the pipeline would rest in the hands of Albertans. Those dividends could then be paid through profits earned by the pipeline at a later date.

    https://en.wikipedia.org/wiki/War_bond

    Reply
  4. Bob Raynard

    July 26th, 2018

    You argue the case well, David, especially the idea that government owners would be more conscientious about leak prevention. Although some people oppose the pipeline because of the greenhouse emissions of bitumen extraction, opponents most visceral argument is based on leaks. I would love to see a judge, when fining a pipeline company for a leak, direct the company to take the fine out of the shareholders’ dividend, so the shareholders could see what their company has done.

    With regards to the idea that private ownership is always best, we are starting to see now that privately run driver testing may not have been the good idea we thought it could be.

    Reply
  5. Bloozguy

    July 26th, 2018

    “Possibly even ensure our oil sands activities did not trash our climate commitments under the Paris Agreement and international climate change measures yet to come.” ……”thought I was.. [completely] nuts”. Guess what.

    Reply
  6. Geoffrey Pounder

    July 26th, 2018

    “If an expanded pipeline capable … is essential to the health of the national economy, and the survival of Alberta’s…”

    Unsubstantiated hyperbole.
    AB’s oil industry flourished for years without this pipeline expansion (TMX).
    The oilsands industry contributed 2.66% of total GDP in 2017 (CERI). Extra revenues from TMX represent a fraction of that.
    Subtract externalized environmental and health costs and subsidies.
    The oilsands industry is still making money. Suncor reported net income of nearly $1 billion last quarter.

    As former AB Liberal leader Kevin Taft points out, the AB govt earns more from gaming and alcohol sales than it does from bitumen royalties.
    Bitumen royalties make up a mere 3.5% of the total AB budget.

    Wealth that degrades our life-support systems is illusory. The costs of climate change and fossil-fuel pollution are prohibitive. The oil industry is viable only as long as it externalizes environmental and health costs.
    *
    “Plus, if those wonderful predictions about the “Asian premium” are true…”
    Why do nearly all tankers out of Vancouver head to U.S. destinations, not Asia?
    *
    “Possibly even ensure our oil sands activities did not trash our climate commitments under the Paris Agreement”
    Non sequitur. How does govt ownership of a pipeline limit oilsands emissions?
    Oilsands emissions are grossly under-reported.
    AB’s 100+ Mt oilsands emissions cap represents more than two thirds of Canada’s 2050 target (150 Mt).
    Add emissions from conventional fossil fuels. And the rest of AB’s emissions. What does that leave for other provinces and industries?
    How does pipeline ownership solve any of these problems?
    *
    “Reassure both British Columbians and Albertans, including Indigenous peoples”
    Pipeline spills are inevitable.
    Recovery of spills at sea is typically 10-15%. “World-class” oil spill response is meaningless.
    Without free, prior, and informed consent, UNDRIP is meaningless. Either we endorse UNDRIP or we do not.
    *
    “Ensure meaningful financial and environmental accountability”
    Govt ownership does not ensure better environmental performance or improve accountability. Expect more bureaucratic intransigence and obfuscation. Govt depts and regulators have been under the thumb of industry for years. Further blurring the line between govt and industry will not help.
    Govt is responsible for regulatory oversight and climate action. As a pipeline owner, govt will seek to maximize benefit from pipeline activity, including upstream oilsands operations. Pipeline ownership increases govt dependency on oil revenues, increases an already intractable conflict of interest, and entrenches the petro-state.

    Reply
  7. Albertan

    July 26th, 2018

    The “International Marine Organization has announced plans to limit sulphur in bunker fuel by 2020. Bunker fuel is sourced from heavy oil. This regulation would have a dramatic impact on bitumen by lowering the demand for and price of Canada’s heavy crude oil,” as aptly described, and more, again, by Andrew Nikiforuk here:
    http://www.thetyee.ca/Opinion/2018/05/29/Canada-Dirty-Pipeline-Bailout/
    Perhaps it is no wonder that the feds are in such a hurry to ‘offload” a possible/probable pig-in-a-poke.

    Reply
  8. David

    July 26th, 2018

    I think your are right about continuing government ownership is the best approach here, certainly at least until the expansion pipeline is completed. It would look very terrible politically to sell the existing pipeline at a loss to some company making great promises of continuing expansion and then only to have it change its mind a year or two later.

    Reply
  9. political ranger

    July 26th, 2018

    Even with that lipstick, David, it’s still a pig!

    Reply
  10. Pogo

    July 26th, 2018

    Oh! And for all you serious bloggers out there? Please at least allow your suffering fans the ability to edit their posts. Your are our favourite sites after all! https://youtu.be/ZQgYn23Xvck

    Reply
  11. Scotty on Denman

    July 26th, 2018

    The feds bought an existing TM pipeline that still is delivering conventional oil to Burnaby and, mostly, refineries in Washington state. Left on its own it will eventually pay for itself.

    Not so plain is the amount of investment required to make shipping dilbit—the stuff proposed for the TMX pipeline yet to be built—through the busy, island-studded inside waters of two nations absolutely failsafe. We’ve heard a figure, $1.5 billion, quoted as contributory to making dilbit supertanker traffic failsafe, but have no idea if it will be spent on more of the same, proven inadequate conventional oil spill responses, or on some kind of as-yet described new systems to deal with the much more difficult dilbit spill; neither have we seen commitments to have these as-yet (I suspect) untested technologies in place before dilbit shipping commences at a rate seven fold the current rate for conventional oil shipping.

    What we have heard is equivocation about Victoria dumping raw sewage into Juan de Fuca Strait (the city is currently building a massively expensive and disruptive sewage treatment system) or that lots of ships already spill fuel and oil into these inside waters—so, I guess, it’s supposed to make adding a significantly higher risk better?

    But never mind all that for now: the TMX pipeline is yet to be built and that will run smack into Aboriginal Rights and Title, post-“Tsihlqot’in” SCoC decision. How much will these court challenges, win or lose, add to the cost of building TMX?

    Finally, there is no magic Asian sugar daddy committed to paying a premium for petroleum’s lowest grade product. Shouldn’t we know at least how much shipped dilbit will sell for before we invest in TMX? Shouldn’t we know what the cost of First Nation and BC provincial litigation might cost the TMX project will be? What’s the hurry? The existing TM pipeline is still making money right now without doing another thing.

    Reply
  12. Jim

    July 29th, 2018

    I would assume there would be no sale until the taxpayer has paid for finishing the project. That said if we had a functioning media and journalists in this country the fact that our finance minister owns a company that makes rather large sums of money advising pension funds would be front and centre. How much will he personally gain when this thing is sold off? Then again no one seemed to care when the CRA gave a sweet deal to tax avoiders who happened to be clients of the accounting firm that audits his companies books. Wonder if they do his personal taxes as well…

    Reply

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