Crude Awakening: How the Keystone Veto Dashes Canada’s ‘Superpower’ Dreams

Oil prices are crashing and Obama has vetoed Keystone XL. Will Canada double down on its dirty tar sands?

Canada's-Economic-ImplosionBarack Obama’s veto of Keystone XL has placed the export pipeline for Canadian tar-sands crude on its deathbed. Earlier in February, the Environmental Protection Agency revealed that Keystone could spur 1.37 billion tons of excess carbon emissions — providing the State Department with all the scientific evidence required to spike the project, permanently. If the news has cheered climate activists across the globe, it also underscored the folly of Canada’s catastrophic quest, in recent years, to transform itself into a dirty-energy “superpower.”

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In the minds of many American right-wingers, Canada may be a socialist hell-scape of universal health care and quasi-European welfare policies. But it is also home to 168 billion barrels of proven oil reserves, the third-largest in the world. Since ultraconservative Prime Minister Stephen Harper — famously described by one Canadian columnist as “our version of George W. Bush, minus the warmth and intellect” — took power in 2006, he’s quietly set his country on a course that seems to be straight from the Koch brothers’ road map. Harper, 55, has gutted environmental regulation and fast-tracked colossal projects to bring new oil to market. Under his leadership, Canada has also slashed corporate taxes and is eliminating 30,000 public-sector jobs.

Riding record-high oil prices,–$107 a barrel as recently as last June,–Harper’s big bet on Canadian crude appeared savvy. The oil boom had driven a seven percent surge in national income, helping Canada ride out the Great Recession with less anguish than most developed nations. And with fossil fuels swelling to nearly 40 percent of net exports, Harper’s Conservative government was on track to deliver a Tea Party twofer in advance of federal elections this fall: a budget surplus and a deep tax cut for the country’s richest earners.

But today, with the price of oil cut in half, the Canadian economy is staggering. Tar-sands producers have clawed back billions in planned investments and begun axing jobs by the thousands. The Canadian dollar, recently at parity with the U.S. dollar, has dipped to about 80 cents. Instead of a federal budget surplus, economists are now projecting a C$2.3 billion deficit. “The drop in oil prices,” said Stephen Poloz, the nation’s central banker, in January, “is unambiguously negative for the Canadian economy.”

If low oil prices hold, the pain will get worse. Most of Canada’s reserves are locked up in tar sands. The industrial operations required to get the oil from the ground to your gas tank are not only filthy and energy-intensive — generating up to double the greenhouse emissions of conventional oil — they also take years of construction to bring online. Because of investment decisions made during the boom years, tar-sands production is projected to expand by seven percent this year, exacerbating the glut. The collapse of crude is threatening to take Harper’s nearly decade-long rule down with it. Canada’s Liberal party, headed by 43-year-old Justin Trudeau (son of legendary Canadian PM Pierre), is running neck and neck in the polls, and bashing Harper where he used to be strongest — his management of the economy. “It’s not fiscally responsible,” said Trudeau in January, “to pin all your hopes on oil prices remaining high, and when they fall, being forced to make it up as they go along.”

As we, in the United States, consider the fate of our own massive oil reserves and confront the specter of yet another Bush presidency, Stephen Harper’s Canada offers a cautionary tale — about the economic and political havoc that can be unleashed when a first-world nation yokes itself to Tea Party economics and to the boom and bust of Big Oil.

Stephen Harper came of age in Alberta, a land of cowboys and oil rigs sometimes referred to as “Texas of the North.” He began his career in the mailroom of Imperial Oil (today an offshoot of Exxon). He rose through Parliament promising a revolution in federal affairs under the battle cry “The West wants in!” Following his election to prime minister in 2006, he wasted little time unveiling his plan to open up his nation’s vast oil reserves.

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Burnaby wants details on Kinder Morgan advertising

City submits motion to NEB for info on costs of ads

by Jennifer Moreau

The City of Burnaby is taking aim at Kinder Morgan’s pro-pipeline advertising campaign and questioning whether consumers will end up paying for the publicity.

The city filed a motion Thursday with the National Energy Board asking for several things, including details on how Kinder Morgan is funding its ad campaign, and whether the money is coming from extra “firm service” shipping fees approved by the National Energy Board.

“It’s a bad policy, regardless of what aspect of the project proposal the fees are paying for. But if these federal government-sanctioned shipping fees are funding Kinder Morgan’s current multi-million-dollar ad campaign, it would be particularly inappropriate,” Burnaby Mayor Derek Corrigan said in a media release. “We want to know whether or not some of these ‘‘firm service fees’’ are being used to pay for the cost of Kinder Morgan’s advertising that is clearly nothing more than an attempt to improve their tainted corporate image.”

A couple years ago, the National Energy Board gave Kinder Morgan permission to charge some of its Westridge Marine Terminal customers firm service fees averaging an extra $1.45 per barrel of oil. Those fees total roughly $29 million annually, according to Ian Anderson, president of Kinder Morgan Canada. The money is used to offset the pipeline expansion’s development costs, so if the project is rejected, there is no risk to investors.

Robyn Allan, former CEO of ICBC, cried foul and suggested those costs would ultimately be passed onto consumers. Anderson refuted her argument in a letter to the Burnaby NOW last July, saying the oil will sell at a higher prices overseas.

Allan maintains that will drive up crude costs in Canada, and refineries will pass those costs onto consumers.

The city is asking the NEB to step in and issue orders to obtain Kinder Morgan’s projected advertising costs and details on how they are funded, as well as an order to make sure Kinder Morgan’s firm service fees aren’t used for advertising costs. The city also wants the NEB to order Kinder Morgan to inform the public on the extent of the pipeline expansion and its potential risks and impacts.

In the motion, the city’s lawyer, Greg McDade, notes that some of the advertising has appeared in Burnaby newspapers and had been targeting Burnaby residents.

Scott Stoness, a vice-president with Kinder Morgan Canada, said the company’s advertising campaign is part of Kinder Morgan’s efforts to engage with and provide information to as many British Columbians as possible.

“The information highlights Trans Mountain’s company history, culture, and commitment to safety,” he said in an emailed statement to the NOW. “Consumers are not paying for our advertising, as (the) price of gasoline in the Lower Mainland is mostly dependent on world market prices. Prices paid by local consumers at the pumps are driven by world oil prices, not Alberta oil prices, so any increase in price per-barrel as a result of Alberta producers accessing world markets due to expanded pipelines does not mean higher gasoline prices for locals.”

Stoness explained that many factors affect gas prices, including taxes, refining costs, seasonal fluctuations and general rules of supply and demand.

“The cost of crude oil makes up less than 50 per cent of the ultimate price you pay at the pump,” he said.