Jason Kenney pledged during his run to be Alberta’s premier that he would come out guns a-blazing over what he said is a multifront attack on the oil patch. It took him just hours after he was sworn in to launch his first salvo at British Columbia.
So began Canada’s new energy war, full of fury and some fog.
The charged arguments emanating from both provinces play well with the faithful, logic be damned.
Mr. Kenney accuses B.C. Premier John Horgan of standing in the way of the Trans Mountain pipeline expansion, a long-delayed project the energy industry sees as critical to its future prosperity. The existing pipeline, owned by the federal government, is the only major artery for Alberta oil and refined products to reach B.C.'s Lower Mainland.
There, for reasons related to U.S. refinery outages rather than any opposition to the stalled $7.4-billion pipeline expansion, gasoline prices have soared.
The new Premier’s first order of business was to press ahead with a law that would allow him and his United Conservative Party government to shut off the taps on oil and refined products to their western neighbours as punishment. Mr. Kenney’s predecessor, Rachel Notley, introduced the initial legislation, but she never used what is basically the fossil-fuel version of the nuclear option.
Mr. Kenney has said he does not intend to push the button just yet — and has not been clear about what would prompt him to do so.
The B.C. government’s distaste for the Trans Mountain expansion has not been the main cause of the project’s regulatory quagmire. Blame that on a disastrous federal consultation record with Indigenous communities and insufficient evaluation of how increased oil tanker traffic off the Pacific coast will affect orcas.
Cutting off the supply of petroleum to B.C. would cause major economic pain there, as costs would escalate for residents and businesses alike.
But it would cause serious blowback in Alberta. Shippers on the 300,000-barrel-a-day pipeline would suffer, and crude would quickly gush into already-bulging storage tanks in the province, leading to a massive drop in the value of Alberta heavy oil versus U.S. benchmark crude. That would snuff out any recovery in the finances of oil producers. Perhaps the only real winners would be refiners within Alberta and in the U.S. Midwest, which would enjoy fat margins at their plants.
It may not come to this. B.C. has filed a constitutional challenge to what’s become known as the “Turn Off the Taps" law, and it could well have a case, as there seems to be no legal basis for restricting interprovincial trade over a pipeline approval spat. Mr. Horgan has also called on the feds to make sure there’s enough gasoline and diesel flowing through Trans Mountain to head off a further spike at the pumps. Lately, a litre of regular unleaded in the Vancouver area has cost about $1.70.
Even if opposition to the Trans Mountain expansion is not directly responsible for the current run-up in gas prices, Mr. Horgan can be fairly accused of hypocrisy on the fuel front as well.
It is a fact that Trans Mountain carries liquid hydrocarbons, some derived from the oil sands. Much of that fuel finds its way into the gas tanks of B.C. motorists, who are now feeling the pinch every time they pull up to the pump. It’s tough to have it both ways, but that seems to be the goal. As a possible solution, Mr. Horgan has suggested that Alberta could build another refinery, something that is unlikely to happen.
To keep up a fight against the expansion of a pipeline that would, as its backers insist, bolster energy security in British Columbia is counterproductive. It is true that most of the new capacity would be aimed at export markets, but it is also true that there would be more oil to go around, including to an existing refinery in Burnaby, B.C., to help guard against price spikes and an angry electorate.
But this is war, and as ever, the first casualty is truth.