Hallelujah! Prime Minister Mark Carney’s Liberal Canadian government has designated Alberta’s next bitumen pipeline to the Salish Sea a project of national interest, big smiles all ’round – including, of course, Alberta Premier Danielle Smith’s.
“In a more volatile, dangerous and divided world, speed, certainty and predictability are competitive advantages,” Mr. Carney said yesterday in Fort McMurray, the city that serves as the cultural and ideological touchstone of Alberta.
“Canada will remain a country of high standards, but high standards do not require slow decisions,” the PM continued, a statement to which we Albertans can add the words, with a knowing smirk, “or necessarily apply to oil and gas extraction.”
“There’s always going to be issues where we might have some disagreement,” said Ms. Smith at the same event – a sentiment that apparently extends to open secessionist activity in her United Conservative Party Caucus. “But the approach that I’ve seen the Government of Canada take is one where they genuinely want to identify problems and genuinely solve them.”
It appears, then, that Mr. Carney has achieved something that none of former Alberta premiers Rachel Notley and Jason Kenney, former Conservative prime minister Stephen Harper, or Premier Smith herself could achieve, that is to say, create social license for the idea of major pipelines running hither and yon out of Alberta.
Those who are happy to see this happen – without question a majority of Albertans – should also acknowledge the contribution of Donald Trump, the capricious and erratic president of the United States, to creating the circumstances that not only allowed this kind of thing to happen, but arguably made it inevitable.
The new pipeline will follow the route of the two old pipelines – the original Trans Mountain Pipeline, and the Trans Mountain Expansion Pipeline. Just in case anyone should conclude that this means it is just a Trans Mountain Expansion expansion (TMXX), though, the clever marketers in Ottawa have dubbed it the Pacific Link. Indeed, it will be built by the federally owned Trans Mountain Corp.
The new pipeline is expected to cost as much as $44 billion. It will be 90 per cent by the federal and Alberta governments, which means we’re all paying for it, although private-sector investors are lurking in the shadows, we have been promised.
So when you crawl into bed tonight, rest easy in the knowledge that God’s in His fossil-fuelled Heaven and all’s right with the Petrosphere!
But is it? Not to rain on anyone’s parade, but what if something were to go wrong with today’s booming market for bubblin’ crude – oil, that is, black gold, Alberta absinthe?
A column in The New York Times yesterday makes a startling prediction: “Oil’s big bust is coming. The stage is set for a price crash, and not the kind that would benefit President Trump before the midterm elections.” Or Alberta separatists, either, as suspicious as they may be that Mr. Carney’s and Ms. Smith’s performance in Fort Mac was timed to derail the glorious Alberta future they keep promising us.
The author, British business journalist Philip Delves Broughton, recalls the days in the early 1980s when oil prices fell from around $30 US a barrel to $10 when Saudi Arabia flooded the market, thereby demonstrating the iron law of supply and demand.
“The combination of a U.S. slump and the fall in global oil prices took Houston into its own version of the Great Depression,” said Mr. Delves Broughton, the author of Embargo: The 1973 Oil Crisis That Changed the World (And What We Can Learn From It Now). “Pawnshops, bursting with furs and Rolexes, had to turn away consigners. In the evening, the sunlight shone through empty skyscrapers, unfiltered by people or furniture.” Something similar happened in Calgary at the same time, Alberta readers with long memories will recall.
So when the Iran War ends and the Persian Gulf reopens, the Ukraine War is over and Russian gas begins to flow to Europe again, as new oilsands come onstream in Venezuela, more countries follow China’s example to move into renewables and away from fossil fuels, and recession looms, killing demand, the possibility of a new oil price crash grows too, Mr. Delves Broughton gloomily forecasts.
“Watch out,” he warns. “When oil prices start to fall, producers race to the bottom. They increase production, which briefly sustains revenues until the additional supply forces prices down further. One by one, higher-cost producers are forced out, unable to sustain the losses.”
“Conditions are now pointing toward another oil collapse,” he concludes. “It is just a question of when.”
When? Perhaps about the time the TMXX gets finished. Maybe even before it’s halfway to Roberts Bank – the West Coast geographical feature, that is, not a financial institution.
What will the T2P Hillbillies do then? Other than blame the Liberals in Ottawa, plus the Alberta NDP, of course, who – if their usual luck holds – will have just formed the government of Alberta when the price of oil falls through the floor.