What you need to know about BC’s proposal to limit the shipment of oil sands crude
February 6, 2018
As part of the agreement with the Green Party that allowed the NDP to form government in BC last year, both parties committed “to employ every tool available to the new government to stop the expansion of the Kinder Morgan pipeline.” With their announcement on January 30, 2018, the BC government looks to be taking steps to make good on their election agreement.
While no regulatory changes have become official, BC’s proposal, if enacted, will limit the increased transportation of diluted bitumen until the BC government is able to study and determine the ability to adequately mitigate spills.
This action could have serious implication for all Canadians, not just for Alberta’s oil and gas sector – here’s why.
How will this impact Canadians?
To start, this proposal will further delay Alberta’s ability to get resources to global markets.
While BC’s announcement made no reference to any specific project, it does create additional uncertainty for Kinder Morgan’s Trans Mountain pipeline expansion. This is particularly concerning as greater access to global markets, particularly through the expansion of Trans Mountain, could offer Alberta, BC, and Canada significant economic benefits.
Twinning the Trans Mountain pipeline will inject an estimated $7.4 billion into the economy – resulting in $73.5 billion in increased revenue for producers, and the equivalent of 37,000 jobs per year across Canada over 20 years of project operations. Businesses in a wide range of industries also stand to benefit from the pipeline expansion as job and income growth spill over into greater customer-demand.
Pipeline expansion will also help Canadian governments provide the public services that families depend on. If we are unable to get our resources to market, and continue to accept a substantial discount for our products, then education, healthcare, and every other life-improving public service will receive less funding as millions of dollars in tax revenue is left on the table.
Along with these more direct impacts, BC’s proposal will have significant consequences for the long-term health of Canada’s economy. While policy changes have made Western Canada’s oil and gas industry less attractive in recent years, all industries across the country could be impacted by these types of inter-provincial disputes that reduce investor certainty. BC’s proposed restriction sets a dangerous precedent that investments are not safe from political risk in Canada.
A key factor of productivity, wage, and economic growth is capital investment. To improve the standard of living for all Canadians, Canada must remain a stable and attractive place for capital investment.
How should Canadian policymakers respond?
The movement of energy products across provincial boundaries falls under federal jurisdiction.
The Calgary Chamber of Commerce is calling on federal and provincial governments to stand up for Canada’s business community and ensure that a provincial government cannot single-handedly stop projects that have already been determined to be in the national interest.
Now, perhaps more than ever, our policymakers must support Canadian business efforts to sell products to the global market. As other jurisdictions improve their investment climates, it is especially important for our policy makers to refrain from creating uncertainty. And as we continue to tout the benefits of free trade and cooperation to our neighbour to the south, Canadian policymakers should look to tear down our own trade barriers, not put them up.