I spent time this week in Calgary, where pipeline capacity and economic transition continues to animate the political discourse surrounding Election 2019.
Canada sells its crude at a discount to North American regional hubs because of a lack of refinery capacity and a limited ability to reach global markets beyond the United States. The spread hit $50 per barrel in 2018 and currently sits between $12 and $15 per barrel. The Fraser Institute has calculated that “in 2018, after accounting for quality differences and transportation costs, the depressed prices for Canadian heavy crude oil resulted in CA$20.6 billion in foregone revenues for the Canadian energy industry.” In addition, 99% of Canadian oil exports currently flow to the United States, which is simultaneously increasing its own production and becoming more protectionist under President Trump.
The Liberal Government rejected Enbridge’s Northern Gateway project in 2016. TransCanada walked away from Energy East in 2017, after spending $1 billion on its development. Currently there are only two pipeline projects at the centre of this issue: the Trans Mountain Pipeline (TMX) and the Eagle Spirit Pipeline.
Despite the Trudeau Government’s commitment to getting TMX – the pipeline now owned by the Government of Canada – built, Albertans don’t appear to be giving them much credit on the file. There are 34 federal electoral ridings in Alberta. Three are held by Liberals, one is held by the NDP and there is one Independent MP. 29 are held by Conservatives. Current projections show that the Conservatives are expected to sweep all 34 seats in the upcoming election – in most cases by safe margins.
Should the Liberals win a second mandate, perhaps propped up by the NDP or the Greens, this will present a curious situation for Alberta: the province will have no representation in the governing party’s caucus and will therefore be shut out of Cabinet. Currently, Hon. Amarjeet Sohi, the Minister of Natural Resources and MP for Edmonton-Mill Woods, represents the voice of Alberta at the Cabinet table. However, he won his seat in 2015 by 92 votes and is unlikely to be returned to Ottawa.
A province being effectively shut out from the ruling party of the day is not unheard of. In the midst of Liberal party collapse during the 2011 election, then-Prime Minister Stephen Harper won a majority government without a single seat in Quebec, the bulk of which went to Jack Layton’s surging NDP.
But without representation at the Cabinet table, good advice must come from other sources, including other government officials, national public support for regional action and proactive representation from industry.
One ally to Alberta is Senator Grant Mitchell, one of the few remaining Senators who overtly represent the Liberal Party. Another is Senator Paula Simons who ably represented Alberta’s concerns with C-69, the legislation that overhauled Canada’s Environmental Assessment regime.
Moreover, many Canadians outside of the province understand and support Alberta’s interests. In January of this year an Angus Reid poll found that 61% of Ontarians believe that “the lack of new oil pipeline capacity is a crisis.” Angus Reid then found in June that 61% support the Government’s most recent approval of TMX.
This same support isn’t seen in Quebec, where ‘pipeline’ is a four-letter word. And the Liberals are poised to drop seats in BC, which will be seen by many as an indictment against TMX.
Under this scenario, then, it becomes increasingly imperative for Alberta’s industry to make its voice heard in Ottawa, through formal consultations, direct engagement with elected and Departmental officials, and an ongoing drive to keep Alberta’s interests central to the federal government agenda. Trade associations, like my former employer the Canadian Electricity Association, can play a major role here. Individual companies should also reinforce collective advocacy with company-specific engagement.
Of course, the Liberals may not win the election. The Conservatives may win on October 21st, in which case the challenge for Alberta will shift from having its concerns heard to having its interests (which Albertans argue are in the broader interest of Canada) supported by all.
CPC Leader Andrew Scheer is promoting a national energy corridor as part of his election platform. In this case, the question will be what does compromise look like in order to get all provinces – including BC and Quebec – onside with the vision?
Alberta sits at the heart of Canada’s economic transition. Its economy is facing headwinds from climate action, difficulty obtaining social license for infrastructure and evolving market opportunities. Many Albertans feel that the rest of Canada is not taking their recent economic downturn and job losses seriously enough.
Regardless of the outcome on Election Day, addressing Alberta’s concerns must become a national imperative. Canada must come together to chart a more unified course.