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The Globe and Mail

Why Canada needs a national energy strategy for pipelines

The provincial squabbles over the future of oil pipelines make it cyrstal clear that not much has changed in the past 40 years. The provinces are still envious and resentful of Alberta's oil wealth, and the country still needs a national agreement on energy policy to get over it.

On the heels of a framework agreement between Alberta and British Columbia to settle their differences on pipelines to the West Coast – a deal that sets the stage for B.C. to pursue some form of payment from the energy industry in return for transporting lucrative heavy crude across the province's land – we hear rattling of similar sabres from Ontario. A new research paper, published by the Mowat Centre for Policy Innovation, argues that Ontario has "good reasons" to oppose new oil pipeline proposals unless Alberta and Ottawa address the province's economic and environmental concerns. Ontario's government is on record as favouring pipelines in principle – so long as there is economic benefit for Ontarians.

As a born-and-raised Albertan who watched Peter Lougheed defend Alberta's constitutional right to its energy resources against the grasping hands of its partners in Confederation, this bears a familiar ring. While there is a 21st-century twist – wanting Alberta's oil patch to pay a price for the environmental impact of the energy exports that it sells and others burn – the tone is similar. If Alberta is going to get rich off the oil sands, the other provinces want to know what's in it for them.

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While they don't have much of a constitutional leg to stand on, that doesn't mean there aren't logical legs. Alberta is relying on other provinces to help it unlock value from the oil sands which is being hamstrung right now by inadequate transportation. Persistent pipeline bottlenecks are the biggest reason why Western Canadian Select crude, the benchmark oil-sands grade, is trading at a discount of nearly $40 (U.S.) to the U.S. benchmark West Texas Intermediate oil; there's simply too much Alberta crude that can't reach markets where it is needed.

Putting pipelines across other provinces to reach those markets is the most sensible, most efficient and safest solution. But if a province is going to take on some environmental risk to do that, why should they freely allow Albertan interests to dissect their provinces with pipe, without getting compensated?

Of course, many of those provinces are themselves the markets that could benefit economically from having Alberta oil delivered to their doorsteps. Nearly half of Canada's net oil needs are imported, and the vast bulk of imports go to Eastern Canada, especially Ontario; meanwhile, more than half of the country's oil production is exported. Canada can provide ample domestic demand for oil produced within our borders, but the lack of pipelines keep us beholden to foreign supplies, and benefiting foreign economies.

Clearly, there's a national benefit to moving forward. Equally clearly, the time is overdue for a true national energy policy – one where the national value, and cost, of the oil sands is properly addressed and unlocked to the benefit of the national economy.

Whether it can be done amid the ongoing squabbling is certainly the challenge. But the fact that Alberta's own Premier, Alison Redford, is spearheading the push for a pan-Canadian energy strategy, a co-operative initiative among the provinces, speaks volumes. Alberta recognizes that this is a national issue, not a provincial one. Either the country comes to terms with that, or we bicker away a key competitive advantage and economic engine.

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