Hard talk on Northern Gateway

Hard talk on Northern Gateway
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The Chancellor of Germany was in Ottawa this week, in a largely perfunctory diplomatic visit that nevertheless allowed Canada to press her for a Canadian-EU free trade deal. On Thursday she gave the idea her blessing, and the peasants rejoiced. It could result in a $12 billion annual boost to Canada’s GDP, all the press releases noted happily.

Alas, the conservative Fraser Institute took the air out of that giddy stat with a press release of their own later that day. Canada is currently losing $19 billion a year simply through trade inefficiencies at the Canada-US border, they noted. The entire convoluted process of negotiating an impossibly arcane, interest-group appeasing trade deal with an entire continent wouldn’t even be enough to compensate for a few bureaucratic snafus with America.

This almost comical lack of perspective brought to mind a similarly fun fact cited by Liberal bigwig Frank McKenna a few years ago. Did you know, he said, that Canada trades more with Home Depot than the entire nation of Japan?

Statistics like these are good to keep in mind in the midst of western Canada’s epic debate over the so-called Northern Gateway Pipeline, an extremely ambitious and controversial construction project that may ultimately rest on a false premise.

In the aftermath of President Obama’s waffling on the future of the so-called Keystone Pipeline that would ship oil from Alberta to Texas, snaking through the Midwest, it became very fashionable to demand a “plan B,” destination for Canadian oil. Ah ha, responded the Enbridge pipeline corporation, I have just the thing! We can build a pipe from the wells of Alberta to the coast of British Columbia,  where the B.C.ers can put the oil on boats and ship it to China!

In a supreme bit of irony, however, it turns out that British Columbia politicians don’t trust giant pipelines any more than Midwestern governors or Democratic presidents. The effervescent B.C. premier, Christy Clark, has taken a very hard-line, suspicious stance against Northern Gateway, demanding considerable assurances and compensation from both Enbridge and the Albertan government before she’ll even consider the proposal. Facing a tough bid for re-election, it’s widely assumed this is her way of playing politics, since the poll-topping B.C. NDP is simply opposed to the project, period, much like nearly 60% of British Columbians.

The substance of the concerns are standard. People are worried about pipe explosions and ruptures, something Enbridge pipes have been known to do. They’re worried about a prolonged, bumbled BP-style cleanup, as some of the most scenic nature in Canada is soiled. Then there’s Premier Clark’s uniquely Canadian worry that her province will not be able to leech enough royalties from the thing, a brazen cash grab that is quite clearly unconstitutional, and has led to a dramatic breakdown in Alberta-B.C. relations.

Officially, the Harper administration is backing the project, and as leader of the federal government, the PM could probably guarantee that the pipeline gets built regardless of what Alberta or B.C. thinks, as multi-province projects are supposed to be an Ottawa mandate in the first place. The amount of tension the project has created in their western electoral base, however, must be giving the Tories more than a little pause as they contemplate the future.

By Enbridge’s own estimates, the completion of the Northern Gateway pipeline would yield $270 billion in growth to Canada’s GDP over the next 30 years, or about $9 billion per annum. Having to stretch it across three decades proves just what an unimpressive figure that truly is; an enormously invasive, five-year project to yield an outcome that, again, is still only worth about half of what could be gained by simply tightening up our existing trade regime of shipping goods on trucks into the United States. In contrast, the estimated benefit of the US-Canadian Keystone pipeline is somewhere in the realm of $600 billion over 25 years.

Canadians have a longstanding phobia about our trade dependency on the United States, which is often imagined to be a significant root of our undistinguished “America Jr.” identity. Over the years, big business has learned that this anxiety can be easily exploited by selling the Canadian government on costly go-nowhere projects so long as they’re wrapped in the patriotic cloth of promoting “greater trade diversity.” The resource-hungry Chinese government, for its part, has likewise been keen to peddle this mythology that Canada’s economic future is inseparably tied with giving China more of what it wants and America less, a quite obviously self-serving geopolitical objective, but one Canadian politicians are often blind to, so coveted is this goal of “forging new economic partnerships.”

A couple of weeks ago, former Canadian ambassadors to the United States Allan Gotlieb and Michael Kergin wrote an editorial in the Globe and Mail bemoaning how bad Canadian diplomats were at working Washington. We don’t really understand how decisions actually get made through the American political system, which is vastly less unified and hierarchical than our own, they said, and as a result, Canada has been historically quite bad at lobbying and negotiating issues of economic importance in the U.S. capital. To this, I’d add that a culture of anti-Americanism only exacerbates the problem, with Canada’s own ineffectiveness at pursuing its trade goals, as in the case of the long-running softwood lumber dispute, too often popularly imagined as the sheer result of evil American spite and wickedness, as opposed to any incompetence on our own end.

I’m not opposed to the Northern Gateway in theory, I guess, but it’s hard to shake the impression that’s a bit of a self-serving corporate solution in search of a legitimate Canadian interest problem. Despite being massively more consequential economically, the Keystone discussion seems to have vanished from the headlines, even as rising politicians like Paul Ryan turn it into a talking point south of the border. Obama may oppose the project (though even this is hardly obvious) and he may win re-election, but there are still ways to subvert his wishes, if only we could be bothered to consider them.

The real question of Canadian resources is where our own human and political capital are best directed to secure maximum gains for minimal hardship. I’m far from convinced, for either economic, environmental, strategic, or cultural reasons, that the answer is anywhere but the States.

 




^ 16 Comments...

  1. Drew

    "In a supreme bit of irony, however, it turns out that British Columbia politicians don’t trust giant pipelines any more than Midwestern governors or Democratic presidents. "

    And well they shouldn't.

  2. Dan

    …he typed on his keyboard made from petroleum-based plastics.

  3. Drew

    how do you know my keyboard isn't made of wood? Or metal?

    And the fact that we all live in a petroleum-based society shouldn't mean that we should simply accept quite risky schemes because they involve oil.

  4. @Kisai

    I think everyone needs to step back and look at the last time BC got screwed by building something that had a permanent damaging effect on the environment due to lack of foresight: http://www.cbt.org/crt/ The Columbia River Treaty.

    "Under the Canada-BC Agreement these benefits are owned by the Province of BC. Canada sold the first 30 years of its Canadian Entitlement to a consortium of utilities in the U.S. for US$254 million. That agreement expired in phases and the Province of BC now receives a Canadian Entitlement worth approximately US$150 – 300 million annually."

    It should be noted that Generators were never installed at the three Canadian dams until much much later (so it's hard to call the Canadian dams "completed") and that lump sum of 254 million didn't take into account inflation. So if you want to talk about BC losing money, go look here. If you want to talk about environmental damage, the dams sunk fertile farmland (compare with Kelowna) and displaced natives and people who were already living there.

    Really, the natives should be going "not this again." We'd get more out of renegotiating CBT in our favor than we would building the pipelines, and the environmental damage has already been done. Why risk destroying half the pacific coastline of BC with a spill in the Ocean?

  5. Jake_Ackers

    All oil should be taken out of the ground today while we still care about the environment. Fast forward 50 years when we running out or about 10 dollars a gallon, the world will care less about the environment that will be the real problem. Right now we can do it carefully, while in the future its will be a race for it.

  6. Jon from California

    You sir, are an idiot.

  7. Drew

    Except that we DON'T do it carefully. That's one reason why people are so opposed to these kinds of things.

  8. Jake_Ackers

    Society cares now though. In the US when oil hit $5 a gallon everyone was demanding there was drilling. Imagine when it gets higher, people will demand they take it out ASAP. My point isn't so much if its done carefully or not. It's how much society cares whether its done safely or not.

  9. Drew

    How did all that care affect BP? Cmon. It's dangerous. Companies will do anything they can to cut costs, that's what they're supposed to do. Government is supposed to protect us from that. I'm not saying balance cannot be struck, but right now, that balance is tilted far in the favor of companies. I'd rather leave the oil in the ground.

  10. Jake_Ackers

    Oh please. Do you know how many billions of barrells are drilled every year? And we rarely ever get a BP. I am surprised that we haven't had more considering how much people whine about it. The problem with BP was that it malfunctioned. The drilling itself isn't bad, if the safety standards are followed it won't cause the BP problem. For example, do you realize how big ANWR actually is? It's about the size of South Carolina. The area needed to take all the oil out of ANWR is about the size of an airport. That's tiny. Plus not much to damage there anyway. There is an Alaskan pipeline now and I don't see it bursting and it coloring the snowy white Alaska an oil tarred black.

    Yah go leave the oil in the ground and live with the 10 percent unemployment rate and raising oil prices. We need that oil while we transition to another fuel source. It's the simple reality. And and companies might cut costs but gov't does w/e it takes to get votes.

  11. Drew

    thank god we rarely get a Deep Water Horizon, because it's so vastly damaging, we can't handle them more than rarely.

    The problem with BP is that corporations attempted to get around the safety standards. It wasn't a malfunction, it was malfeasance.

  12. Etc.

    A part of the reason we have them so rarely is that oil companies look to those incidents where the relatively trivial cost of actually following the safety concerns is far better to pay than going through a similar incident to the one that lost BP the money that selling off all that oil uselessly wasted and not having to pay tons of people for temporarily ruining the coast would have brought.

    Oil spills hurt everyone, including the oil companies. Of course they're going to try to minimize that risk.

  13. Kento

    You might want to think of a higher figure or a shorter time span, $10 in 50 years would just be a rise of 2% a year…

  14. Jake_Ackers

    I said $10 OR 50 years not both.

  15. Ann Apolis

    "Red China's communist war machine"

    I knew there was a reason I kept reading this comic

    "CANADA NEEDS TO KNOW ABOUT THE YELLOW PERIL DAMMIT"

  16. Tian Zhao

    Well Ms Apolis the yellow peril is right here and can hear everything you say
    Its meant to be satrical Have ever been to china or even searched it up?
    Besides If we sell oil to china we just become their lackey instead of america's
    No country ever becomes a world power for long without manufacturing. How do you think Britain America and china got to where they are now? We need to reduce resource and lower the dollar to help Canadian manufacturing . Besides as we all know resources are finite they will run out and when the day comes well don't say you weren't warned