June 26th, 2019

Governments faced with trying to solve oilpatch’s problems

By Medicine Hat News Opinon on October 11, 2018.

An increasingly hostile campaign that accuses Eastern Canadians of supporting “dictator oil,” “terrorist oil” or worse is increasingly off-base and not helping win over average Canadians.

To be frank, your average Canadian doesn’t import any oil, doesn’t own a refinery and doesn’t have the financial resources to make a pipeline happen.

Do you?

Yet, politicians, lobby groups and a variety of political actors claiming to be champions of the Alberta oil patch are increasingly pushing that message.

For the most part though, Eastern Canadians, who are most often the target, have little choice but to be served gasoline produced from world exports.

Their only part in the energy economy is to fill up at the pump or heat their home with what’s available to them.

The logistics network, storage capacity, capitalization, refining, wholesale distribution and retailing are controlled by oil companies, who, for the most part, designed them exactly as they want them.

Pipelines have become an emotional issue, and a national issue beyond Western Canada.

No discussion is complete without addressing environmental processes and stiff opposition from activists and some Indigenous groups.

However, production has been steadily rising in Fort McMurray for decades. Lines followed but exclusively ran north-south to the United States, where Canadian crude is discounted.

In the bonanza or bust oilpatch, companies are not particularly known for their foresight, but had world export capacity been a priority for the industry, one would assume it would have been suggested a decade or more ago.

The current issue is frustrated by cancelled projects and the most recent among many pauses on the TransMountain pipeline expansion project.

That line would carry Alberta oil to the west coast, world markets and a higher price for the betterment of everyone, it’s said.

Sounds simple, right?

Well, this spring, Pembina Pipeline shelved a relatively easy expansion of its Alliance natural gas line from Alberta to Chicago when not enough interest was garnered from producers. That’s despite a gaping price differential between markets, and seemingly all the same arguments that make TransMountain such a win-win-winner.

Pipeline capacity and price differential have been watchwords in political circles for years.

The Alberta government’s revenue is certainly affected, but whether this bothers major oil companies based in Houston, which control a major portion of Canadian production, remains unclear.

Now, it seems as though the Alberta New Democratic and federal Liberal governments find themselves in the funny position of having to solve the oilpatch’s problem for them.

You’d be hard pressed to find a conservative or Albertan, in general, calling for the sort of market control and ownership rules that were brought in during the Pierre Trudeau-era National Energy Plan.

Yet, that’s essentially what is being called for when opposition politicians and average citizens call oil companies to buy Canadian first, sell to Canadians first or force them to meld their business plans to accommodate a better deal for Canada.

Ottawa’s decision to buy out TransMountain and press the line forward itself in the face of obstruction by environmental groups is explained differently by different sides of the political spectrum.

All agree, however, it’s an extraordinary turn of events, especially in a sector of the economy whose standing request to government for the last 40 years has been “hands off.”

The current pipeline network in North America exists exactly how private companies have chosen to draw it.

That the Alberta government or Alberta public would prefer alternate routes to alternate markets is a separate concern, albeit perhaps the biggest concern facing the Western Canadian economy.

(Collin Gallant is a News reporter. To comment on this and other editorials, go to https://www.medicinehatnews.com/opinions.)

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