The current impasse on the Kinder Morgan Trans Mountain Pipeline Expansion have many pundits, politicians and citizens taking entrenched positions insinuating that this issue has an easy fix the Trudeau Federal Liberal Government is not willing to pursue. We list eight options for the Federal Government below, but as a Read more…
Alberta is used to energy shocks and can quickly adjust to the environment, especially an oversupply. BC gets 80% of its gasoline from Alberta which cannot possibly be replaced with tanker trucks from the US… because BC does not have any pipelines their either. Also, yesterday the Premier of Saskatchewan Read more…
The National Infrastructure Act: How The Federal Government Can Get Infrastructure Projects Like The Trans Mountain Pipeline Done Fairly
The current Kinder Morgan Trans Mountain pipeline debacle agonizingly demonstrates that even medium scale infrastructure projects are easily stalemated in Canada. This has scared away vast sums of foreign direct investment as investors look for easier, more reliable places to put their money. This is a crisis and it appears Read more…
Many people, and politicians (which are also people 🙂 ) have suggested that Alberta cut off the oil supply to British Colombia in an effort to punish the BC Premier, John Horgan. While that is one possibility, there are other things that can be done.
Some options are reasonable, some are draconian and some of them are just not possible.
Here are most of the options available to Alberta:
- Block BC Workers – This is possible but not likely:
- it would be very disruptive to business as the two provinces have a largely integrated work force
- it would annoy BC workers, many of which are in the oil sector, and they are some of Alberta’s biggest boosters in BC so it would be counterproductive to send them home
- Not Buy Electricity From BC – This is doable and in fact has already started
- Alberta walked away from talks to buy BC hydro power from the massive new “Site C” hydro project on February 1, 2018 when the Trans Mountain spat began
- this is a half billion dollar annual sale that BC is playing with
Should the Province of Alberta buy the Trans Mountain Pipeline from Kinder-Morgan if they want to walk away from the project? That question was posed to Alberta Premier Rachel Notley today and she responded with an emphatic ‘Yes!’.
It has become abundantly clear, whether you are for or opposed to this particular pipeline or not, that having the relatively simple twinning of the existing Trans Mountain pipeline fail to be built would signify the end of even medium scale infrastructure projects in Canada.
There will always be interest groups and affected people that have some legitimate claim against a large project. The standard for projects should not be keeping everyone happy. The standard for infrastructure projects MUST be if they are in the national interest. That national interest contains a giant list important factors including:
- environmental concerns
- affected citizens needs and wants
- global competitiveness concerns
- financial concerns
- public safety
Last week the NDP Alberta Government introduced yet another budget without any cuts in it. Instead they are relying on growth to balance the budget by 2023 leaving us with colossal debt of about $96B.
Citizens, including me, do not seem to grasp numbers larger than about $10M so some context is key to understanding. To put that debt in perspective, there are just over 4 million people in Alberta, which makes YOUR personal portion of the Provincial debt $24,000. Statistics Canada shows that Alberta averages 2.5 people per household. This means your household will owe $60,000.
Let’s contrast that number of other Provinces.
How Much Debt Do BC Citizens Owe?
Both the previous Liberal and current NDP governments in British Columbia have been on similar spending sprees and while certainly not as deep, BC has had many similar economic problems to Alberta in recent years. Think about BC’s primary industries (Oil collapse, softwood lumber disutes…). However, in February 2018 their NDP Finance minister announced:
“Government’s direct operating debt is projected to be eliminated in 2018-19, one year earlier than forecast. This will be the first time government has been direct operating debt-free in over 40 years.”
At the heart of the Canadian Federal Governments announcement today about fixing the process that determines if a large scale project is in the best interest of Canada or not, is a desire to limit ability Provincial, Municipal and interest groups (like ‘First Nations’) to stall approved projects. The idea is to:
- increase consultation so everyone’s voice is heard
- set firm and visible rules for industry so that “goal posts” are not being moved after the fact
- determine what is in Canada’s best interest, when that interest is at odds with local interest
These are clearly admirable goals. To achieve those goals there are now going to be three structures that industry must pass through to get Federal Government support:
- A new ‘Impact Assessment Agency of Canada‘ will do the preliminary investigation to determine the environmental effects of a project
- The existing ‘National Energy Board’ is demoted and renamed ‘Canadian Energy Regulator‘ but still be responsible for determining the technicalities of a project
- The ‘Federal Minister of the Environment‘ will have the final say if a project is viable and in Canada’s interest
So now the questions are, will these changes allow:
- Industry to decide that spending many millions of dollars to go through an elongated approval process that will have a definitive outcome be worth while?
- Provincial, Municipal and interest groups (like ‘First Nations’) to be heard and listened to?
There has been much debate over the process and all agree something big had to change:
- When industry works on large scale projects deemed to be in the Canadian national interest after years of consultation and vetting that are still blocked by local and regional interests, there is a big problem.
- When interest groups (i.e. some ‘First Nations’, Municipal governments (i.e. Vancouver) local and Provincial governments (i.e. BC) feel empowered to block large scale projects that adversely affect the rest of the country, there is an even bigger problem.
Dennis McConaghy, a former senior executive at Trans Canada Pipelines thinks these changes will not achieve the desired goals:
Multinational trade negotiations are often accused being a closed door mess with a never ending series of mistakes, but Canadian negotiating strategies on NAFTA have been very successful.
Successful is a subjective word and this site aims to keep to the facts and avoid too much opinion, so let’s define success. In the context NAFTA negotiations, success is defined as a trade agreement that is as favorable to your country as possible, with least amount of drama.
Canada, so far, has been “walking softly and carrying a big stick” with the following successful tactics:
1. Starting Negotiations With Demands: Canada laid out its criteria early in the process. This instantly gave the Canadian negotiators important bargaining chips to potentially throw in at the end to close a deal. Things like the dispute mechanisms and protecting the Dairy industry make great domestic politics, which bolsters your position with the other side, but are “nice to haves” and not truly critical to the success of a final deal.
2. Quietly Racking Up Negotiating Chips: In Canada’s case starting superficially unrelated proceedings, like attacking Boeing’s now demonstrably malicious claim against Bombardier, and starting a WTO claim against the US’ unfair trade practices, gives Canadian negotiators more “chips” to bargain with. Massive deals like NAFTA often include side arrangements to terminate other proceedings.
Recently I attended a Progress Alberta event titled ‘Emergency Town Hall: Why Progressives Can Win in 2019’. This event had four notable presenters and I was very pleased that they allowed me to record the event. Personally, I found sessions 3 and 4 (below) on how the left has to respect the United Conservative Party and Jason Kenny to be the most interesting.
The ‘Coles Notes’ version of the night would be:
- Calgary will be the only notable battleground in the 2019 election
- Alberta is far more left than presented in the media
- Jason Kenny is a machine that must not be underestimated
- The left has a natural role in governing that is not understood or accepted by the general public
- Conservatives own the media, including social media
- I find it amusing that every side thinks the other side controls the media
- The center cannot consistently win elections, which could be extended to ‘people need a common enemy to rally around and that means left or right’
1: Why Progressives Can Win in 2019 Alberta: Alberta is More Progressive Than You Think – 8 mins
It used to be very clear that Alberta had a spending problem and not a revenue problem. However, since the 2014 oil crash, the world and Alberta have forever changed. Historically, oil ‘busts’ were the result of a downturn in some key economy that reduced the demand for oil & gas products. Today we have the worlds first notable price downturn caused by over production of oil, with no end in site.
This over production was started intentionally by Saudi Crown Prince Mohammed bin Salman in an effort to kill shale oil fracker’s and other non-state owned small players. The idea was to have OPEC lead an over production that would drop the price of oil for a few years and force the marginal upstart players (i.e. US based frackers) out of the industry. Then Saudi lead OPEC would reduce supply and drive the price back up. Well, the Crown Prince was wrong and it didn’t work.
More importantly it won’t work in the future. Saudi Arabia and friends can reduce the global price of oil by increasing production but they can no longer raise the price because they no longer control the global output, here’s why:
- American fracking companies scale up their oil production in a matter of weeks
- Canadian oil sands in Alberta and Saskatchewan have vast reserves backed by billion dollar upgrader investments that just keep coming online
- Iran, which has had its oil embargoed for decades, now is pushing 3 billions of barrels onto the open market as of the 2017 lifting of sanctions
- OPEC nations like Venezuela and Nigeria are desperate states the need cash and they will continue to cheat their OPEC agreements and produce produce produce
- Putin and Russia so desperately want to be a world powerhouse but only has an economy the size of Spain’s, with 20% of its citizens without even running water. The Russian federal government gets nearly HALF of its revenue from oil so when the price drops, they just produce more which keeps pushing the price down.
There is a debate over what REVENUE NEUTRAL means. The NDP claims that spending new money makes it revenue neutral. Most everyone else, thinks revenue neutral thinks raising one tax will reduce another.
The Kinder Morgan Trans Mountain pipeline expansion from Alberta to the BC coast has been stalled for the last 6 months. Today Rachel Notley received a standing ovation at a talk in BC in which she explained the economic and environmental argument for the pipeline.
Alberta announces another $1.4 billion in spending at a time when the Province is billions of dollars in debt.