Tuesday, July 31, 2012

Oil May Well Destroy Canada

A fairly devastating economic analysis of the oil sands "benefits" as it relates to the federation.  Despite the continual sales pitch that oil sands development is of great benefit to all Canadians, the report finds an Alberta windfall of biblical proportions, with other provinces left with "scraps":
TransCanada Corp.’s Keystone XL, the largest of the three lines, will bring the most benefit to Alberta thanks to oil-sands development, CERI said. It will add $121-billion in incremental tax revenue over 25 years, while Ontario will receive $6-billion, and $2-billion will end up in B.C. Gateway, on the other hand, will add $73-billion to Alberta’s coffers, $4-billion in Ontario, and $1-billion in B.C.

Kinder Morgan Inc.’s Trans Mountain expansion effort would translate into $60-billion in incremental tax revenue for Alberta, with Ontario and B.C. again left with scraps. Meanwhile, existing pipelines are expected to add $298-billion to Alberta’s pockets, with $15-billion to Ontario and $5-billion to B.C.
Now factor in so called "MILD" dutch disease, which is acknowledged, and you have any upside basically negated for a province like Ontario.  Of course we must factor in equalization payments, but the point is quite clear, when it comes to oil sands development grand inequalities exist.  That Gateway will add SEVENTY THREE times more revenue to Alberta than B.C. really an indictment of the Canadian federation as it stands.

This report again obliterates the notion that Canadian future prosperity is largely tied to oil sands development.  In fact, if these numbers hold true, the obscene disparities will only further fracture Canadian commonality.  The numbers also suggest a national energy strategy proposed by Alberta is really a mechanism to appease the rest of Canada while the province sets itself apart, as though on another tier.  I make no apologies for the notion that a country should see benefits for all its citizenry, which is why I find our constitutional framework outdated and frankly insulting to an ideal surrounding a "greater good" mentality.

Critics argue B.C. is holding Alberta hostage with its unprecedented demands.  While political opportunism is part of the equation, there does exist a fundamental philosophical argument, that really speaks to a generosity, not withstanding agreements made two centuries ago.  Fact is, B.C. are challenging the constitution in a non direct fashion, natural resources aren't neat boxes that solely fall within a provincial jurisdiction and as such require a wider perspective.  If we view ourselves as Canadians first- provinces a secondary identity- than there is nothing particularly offensive about shared benefits, particularly when calculating political risks.

I believe we are entering a long protracted battle that will dominate the federation for years to come.  On the one hand, other provinces lamenting disparity, which will further irritate Alberta.  On the other, I see a developing sense of isolation from Albertans and ever growing succession considerations as money pours in, the narrow greed perspective takes hold, acrimony leading to more pronounced fractures.  In other words, this debate could well tear the country apart, particularly as disparities become more advanced, the practical manifestations plan to the naked eye, human nature being what it is.

What this report highlights is that British Columbia has a very fundamental point, as well as justification for any hesitations coming from places like Ontario.  As well, the sales pitch we routinely hear to sell the oil sands to the "rest" of Canada looks paltry and very much like scraps.  Never mind a national energy strategy, perhaps it is time to ponder the unthinkable, natural resources as the property of all Canadians.  Insane, unworkable, a non starter, but really if Canada is a modern entity, a common sense consideration. 


Anonymous said...

Norway: Flush with resources, 2nd highest GDP in the world, universal health care, Number 1 on the UN human development index, and $500 Billion in a rainy day fund. This is what happens when a country considers itself to be a true nation state rather than a collective of 13 fifedoms. It will never happen in Canada...

Jerry Prager said...

tar sands of Isengard, dark and demonic goings on, texalberta wins again for now

The Mound of Sound said...

Steve, we've about had it out here on the coast. Opposition is coalescing and more of us by the day are agreeing that we have to resist this, even to the point of arrest and incarceration. Beset as we feel by the petro-province, we also feel the rest of Canada has gone out for a pack of smokes.

British Columbia didn't join Confederation so that the central government could expose our province and our coast to environmental catastrophe. That wasn't the deal. We won't have it.

This isn't about money. It's entirely about the ecological integrity of the greatest natural wonder in Canada - British Columbia. Neither Ottawa nor Alberta nor Big Oil is going to be allowed to take that from us, no matter the price.

This resistance is growing. It's now palapable. Even our centre-right newspapers expose Kinder Morgan and the Northern Gateway as an environmental scam.

Ottawa, Alberta and the rest of Canada are going to have to walk over us before a tanker sails from Kitimat. If that happens, it's a fair bet we will secede.

Steve V said...

Not sure why you think the rest of Canada doesn't support.

rockfish said...

Capt. Firewall is the perfect leader for such a national catastrophe -- if the hoped-for-response is the balkanization of Canadian nationalism.
Funny how while Harper and gang (and the Alta populace too) turns a blind eye to the current Chinese nationalization of one of our natural resources, the mere mention of a "national energy policy" that harkens to your suggestion would cause riots among rednecks.
That goes beyond the consideration that the First Nations people have a enormous role to play in this drama -- wonder where Harper's voice is on that issue? Superchicken rides again!

Anonymous said...

As an Albertan, I find this recent sale troubling. A good many people here in the oil patch aren't Albertans though, many from BC and Ontario so they are just as bad as those who mindlessly return the Cons to power election after election.

Omar said...

As an Albertan? I thought you hailed from Peterborough?