Saturday, 3 August 2013

Get It in Writing

As someone who still goes to Petro-Canada to fill up when given a choice, I'm not opposed to a West-East pipeline that's supposed to bring Alberta bitumen to Quebec and the Irving refinery in St. John.  As a soft-headed nationalist I thought Pierre Trudeau did the right thing legislating the  National Energy Plan, and buying up Gulf assets to create Petro-Canada.  The Western Canadian oil patch of course hated all of it. Why do we think they'd like it any better now?

One of the most hated parts of the NEP in the West was a "made in Canada" price, lower than the world price. Albertans still talk about the billions they gave up so people and industry in Central Canada could get cheaper petroleum products. Yet that's just what we're hearing again now from the politicians (not the oil industry mind you) in the Energy East announcements.  If they really believe that get it in writing because I don't.

The reason Western Canadian crude prices are lower than the world price now is because of a crude transportation bottleneck in Oklahoma. Oil gets oversupplied, and just like lobster and potato markets,  the price drops. (see: )  It's been that way for years and that's why the industry has been so desperate to get new pipelines (including Keystone-XL, Northern Gateway) built.  One project, the southern section of the Keystone-XL pipeline from Oklahoma to the Gulf of Mexico refineries is already being constructed, and now the Energy East announcement. Do you think for a second that if and when these projects lessen the oversupply bottleneck and improve access to markets  that tar sands producers won't demand the world price? They detested the energy pricing in the NEP, and they sure as  hell are not going to take lower prices now just because the oil is being refined in Canada.

Even Barack Obama recognizes the spin of pipeline promoters when he talks about Keystone-XL:  “oil is going to be piped down to the Gulf to be sold on the world oil markets, so it does not bring down gas prices here in the United States. In fact, it might actually cause some gas prices in the Midwest to go up where currently they can’t ship some of that oil to world markets.”

So let's at least speak honestly about this project. Announcing it now in the middle of the summer when people read headlines, or glance at the TV,  gets Mike Duffy out of conversations, and sends a threat to the Americans that Alberta will have other markets if XL is refused. Not a bad days work for the PMO, tar sands and pipeline companies. 

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