Alberta premier-designate Jason Kenney intends to enact Bill 12, Preserving Canada’s Economic Prosperity Act, on April 30. If he uses it to shut off the taps on fuel to British Columbia, it could have huge implications for B.C.’s economy.
But Mr. Kenney has already carved out some wiggle room.
On the campaign trail, he played to voter resentment over B.C.’s opposition to the Trans Mountain pipeline. He promised to drive up fuel prices on the Lower Mainland by enacting Bill 12 in the first hour of his new government. He took aim at Vancouver in particular.
“If the B.C. New Democrats continue to block our energy, we’ll happily give them a carbon-free Vancouver by 2020,” he said.
With the ballots now counted, the premier-designate has toned down his rhetoric. He says he’ll try diplomacy first, before actually doing anything that would not only cripple B.C.’s economy, but harm his own as well.
“A recession [in B.C.] would be possible if the shutdown lasted for any length of time,” said Helmut Pastrick, chief economist for Central 1 Credit Union.
Alberta provides at least two-third’s of the fuel that British Columbians consume. Even if B.C. can make up some supply by importing from another jurisdiction, such as Washington State, there are likely going to be bruising hikes at the gas pumps, which will impact not just motorists, but the broader economy.
B.C. began talks with Washington State on new access when Bill 12 was first introduced by Rachel Notley’s government in Alberta. But Washington State faces its own supply challenges: The West Coast has limited refineries and pipeline capability.
“I have visions of the gas-station lineups in the 1970s in the U.S.,” Mr. Pastrick said. “Considering how much economic activity, directly and indirectly, is dependent on the movement of goods and people by transportation modes using gasoline and diesel, a 65-per-cent drop in fuel supplies would result in a huge price spike ... and a contraction in economic activity.”
That contraction would not be limited to B.C., though. If the Alberta government bans shipments of its fuel products to B.C., that product just can’t be shipped elsewhere. Alberta’s shipping capacity is choked in every direction. A ban would not be welcomed by the petroleum producers of Alberta and they would be generating less revenue for Mr. Kenney’s government.
To date, the B.C. NDP government has been keeping its powder dry, with Premier John Horgan stressing that he can work with governments of any political stripe.
If Alberta does cut off B.C.'s fuel, Attorney-General David Eby has already prepared the legal paperwork to seek an injunction and then to file a constitutional challenge.
B.C. tried to block Bill 12 in the courts last fall, but was told the case would not be heard unless the taps are actually turned off.
In court documents filed last May in Alberta’s Court of Queen’s Bench, lawyers for B.C. argued that Alberta’s Bill 12 is expressly designed to punish British Columbia for its opposition to the Trans Mountain pipeline project – a form of discrimination that it says is prohibited by the Constitution.
“A significant disruption in the supply of gasoline, diesel and crude oil from Alberta to British Columbia would cause British Columbia irreparable harm. In addition to economic harm, a sudden disruption in supply could injure human health and safety in remote communities,” the lawsuit states.
If Alberta moved to inflict that kind of pain on B.C., however, Mr. Horgan would have to retaliate.
The economies of B.C. and Alberta are deeply entwined, with billions of dollars’ worth of goods flowing each way across the Rockies each year. Both provinces have no shortage of weapons if they wish to escalate.
Alberta could put a toll on the gas pipelines that flow from B.C.’s gas producers to link to Alberta and markets beyond or target B.C. wineries again. B.C. could ban Alberta beef.
A full-blown trade war could create a lot of casualties on both sides of the border. And it would damage the national economy as well.
But campaign rhetoric and the realities of governing don’t always line up. The Horgan government has already learned this. The BC NDP vowed in the 2017 provincial election to stop the Kinder Morgan pipeline project. When it formed government, members of cabinet were promptly warned by government lawyers of the consequences of that path. As a result, B.C. has watered down its opposition considerably.
Mr. Kenney still wants Ottawa to approve the Trans Mountain pipeline expansion. The day after his electoral victory, he hinted that diplomacy may be more effective. He has bought some time to evaluate his next move.