The Politics of Pipelines
By Eribert Loehner
Liberal Prime Minister Justin Trudeau has been cruising along the highway of Canadian popular opinion since he was elected.
However, it appears he may have just hit a sizeable pot-hole in the province of British Columbia because he approved the construction of an oil pipeline.
Canada is blessed, or cursed, depending on your point of view, with substantial oil reserves.
Much of this oil is in Alberta, a land locked province east of the Rocky Mountains.
Most is exported to the United States where it is purchased at 30% to 50% less than the benchmark West Texas Intermediate price.
Costs and risks
Some of this differential is due to the grade of oil produced in Alberta, but the main reason Americans are not willing to pay more is because Canada does not have the infrastructure necessary to export large volumes of oil to other customers.
There is only one pipeline that carries some oil to the shores of the Pacific Ocean, where it can be accessed by Asian markets, and it’s operating at capacity.
The Trans-Mountain Pipeline runs from Edmonton in Alberta, through the Rocky Mountains to the Municipality of Burnaby, a Vancouver suburb. This pipeline has been in operation since 1953, but not without incident.
In 2007 a hydraulic excavator punctured the underground line and an entire Burnaby neighbourhood was sprayed with crude oil. The oil eventually leaked into Vancouver Harbour.
Due to the depressed price of oil, both the Federal and Alberta Governments have declared it necessary to get the best possible price for Canada’s oil resource.
Some 15,000 jobs in Alberta are dependent on the construction of a new pipeline through British Columbia to Tidewater, and therein rests the problem.
Any pipeline through British Columbia forces the province to carry the highest burden of environmental risk — yet it derives the least benefit.
Tough choices for Trudeau
Before Justin Trudeau’s Liberal Government was elected there were many protests against pipelines in British Columbia. Some resulted in civil disobedience and arrests.
Many Liberal MPs representing constituents in British Columbia were elected because they opposed pipeline construction; now their leader has approved one.
Ultimately, it is up to the Prime Minister to make the difficult decisions. He must wear these around his neck as either love beads or an albatross.
2017 might well be Justin Trudeau’s British Columbia summer of discontent, not the least of which may be within his own party.