The Political Economy of Pipelines and the State

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The following addresses the perception of the role of tarsands and fossil fuels in the Canadian economy, the economics of pipelines, and the Canadian Government as a petro-state.

Canadians dramatically overestimate the contribution of tar sands to the Canadian economy

Recent polling by Environics, commissioned by Environmental Defence, shows that the majority of Canadians believe the tar sands economic importance is significantly higher than it actually is.

According to Statistics Canada, the oil sands account for just 2 per cent of Canada’s GDP. however, 41 per cent of Canadians believe the impact of the oil sands on our economy is between 6 and 24 times higher than it actually is and 57 per cent of Canadians overestimate the value of oil sands in the national economy.

As Environmental Defence states: “We’ve been having a lot of conversations lately about the role of the tar sands in Canada’s economy. We’ve chatted with friends, neighbours, and others. And we often heard the same thing; many people are under the mistaken impression that the economy could crumble if we stop expanding the tar sands. But the truth is, according to Statistics Canada, the tar sands account for just two per cent of Canada’s GDP. That’s hardly what we’d call a major economic driver.” (

However, despite the misunderstanding of the role of fossil fuel, Environmental Defence found that, “What surprised us is that despite this overestimation [of the importance of tarsands in the Canadian economy], given concerns about climate change, most Canadians still think we should be moving away from fossil fuels and towards cleaner energy. A large majority, 76 per cent, of Canadians believe that given climate concerns, we should be moving away from a dependence on fossil fuels towards cleaner energy. And a majority, 66 per cent, of Canadians agree that Canada should be working towards an economy strategy less dependent on the tar sands.” (

Some of the misunderstandings of the importance of tarsands in the Canadian economy probably lies with the misinformation provided by much of the corporate “news” media and advertizing. As MLA Andrew Weaver states, according to Kinder Morgan, employment during the construction phase of the Trans Mountain Expansion Project would peak at merely 4500 temporary jobs. However, Weaver points out that once pipeline construction ends, there will only be 90 permanent pipeline operating positions in the whole of BC.

Given the reliance in Canada on foreign temporary workers and the foreign “guest worker” program, many of those 4500 temporary jobs might not even go to skilled Canadians. As the unions representing the trades in Alberta have complained, even full-time permanent jobs in the tarsands are going to “guest workers.”

It is important to recognize that the Kinder Morgan project would contribute an estimated $50 million in annual tax revenue towards B.C.’s $44 billion budget and that is far less than other sectors of the BC economy, like tourism, fishing and forestry.

As CRED’s summary of reports on the BC economy What’s fueling BC’s economy points out, oil, gas and support services make up just 3% of BC’s GDP. When secondary energy services, including renewables, are added into the equation, the total contribution to provincial GDP only rises to 11%.

According to CRED, “When GDP figures for British Columbia are broken down by industry, financial and real estate services make the largest contribution to provincial wealth – more than 23% of GDP. Retail and wholesale trade make up 10% of our GDP, construction makes up 8% and manufacturing contributes a further 7%.”

Following KMPG, CRED states that the sectors of the BC economy showing the most growth are:

• Construction
• High tech
• Finance and real estate
• Retail trade
• Professional, scientific and technical services,

Oil, natural gas, forestry and manufacturing are continuing to shrink.

Nationally, according to CRED’s summary of economic studies, “oil sands make up just 2% of Canada’s GDP and when conventional oil & gas extraction is added in, the total rises to only 6% of our wealth, a proportion that has actually fallen in recent years.”

In terms of employment in 2012, the mining, oil and gas sector combined employs just 1% of the workforce, or approximately 25,000 people for the whole BC economy!

As CRED notes, BC’s biggest employers are:
• Construction – 205,000 jobs
• Manufacturing – 164,000 jobs
• Tourism – 127,000 jobs
• Real estate & property development – 121,000 jobs

“The film sector adds an additional 36,000 jobs and the high tech sector employs 84,000 people – more than oil, mining, gas and forestry combined.” (CRED)

Across Canada, the numbers are relatively similar. The industrial sectors that employed the most people in 2011 were retail trade, health and social assistance and manufacturing, with more than 11% of Canadians working in retail trade.

Less than 1% of Canadians work in the oil sands. According to the Canadian Association of Petroleum Producers, 112,000 people are employed directly and indirectly in the oil sands, out of a total Canadian workforce of approximately 17.9 m people.

In contrast, Green jobs, including clean energy supply & storage, clean transportation, green building and energy efficiency, “was responsible for 123,000 jobs and $15 billion in GDP in 2011.” (CRED)

No matter how small a percentage tarsands contributes to GDP and employment, the tarsands industry, and particularly the US pipeline giant, Kinder Morgan, wants residents of BC to bear the cost of spills, noxious “off-gassing” and other emergencies. As Andrew Weaver states:

“Serious concerns have been raised by many experts that the Trans Mountain Expansion Project could pose significant economic and environmental risks. With more tankers transiting the coast, the risk of an oil spill increases dramatically. An oil spill could devastate local industries such as fisheries and tourism and cost billions of dollars to clean up- mostly to be paid by tax payers. On average only 5-15% of oil is ever recovered from a spill, meaning that even clean-up measures are limited in their efficacy. The Kalamazoo River oil spill that occurred in Michigan has already cost over $1 billion with economic and health impacts lasting for years. The risk of an oil spill are further complicated by the fact that the tankers would be carrying dilbit, a heavy oil that has been shown to sink under conditions similar to what we have on the B.C. coast.”

The Political Economy of Tarsands and Pipelines 101

Robyn Allan speaking at a BROKE Town Hall in Burnaby – Series links

The Government of Canada as a “Petro-state: The destruction of environmental protections, law and civil society”

Coming in mid-August – to have your say write

Feds expected to be flooded with mining proposals after gutting law: internal doc
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Well, this is unfortunate timing for the Harper government.

Under the cover of an omnibus budget bill in 2012, the Conservatives stripped 99% of lakes, rivers and streams of protection under the Navigable Waters Protection Act.

The gutting of the act, originally meant to strike a balance between the rights of navigation and environmental protection, just came into force in April. The new law significantly reduces the scope over Canada’s waters and facilitates development — including mining projects.

Fast-forward a few months to today, and British Columbia is living through an environmental disaster after a breach of a tailings pond at a copper and gold mine in the Cariboo region. The breach on Monday resulted in 10 billion litres of waste water flooding into nearby lakes, creeks and salmon rivers. The contaminated sludge could fill 2,000 Olympic-sized swimming pools, and a drinking water ban remains in effect along with a local state of emergency.

According to an internal briefing to an associate deputy minister at Transport Canada written just before the Navigation Protection Act (NPA) came into effect — and newly released to PressProgress under access to information law — the federal government fully expected to be flooded with applications for new mine proposals. It also anticipated a much more speedy process for approvals.

“TC forecasts that up to 30 Order in Council exemptions (a process requiring up to 11 months following a positive environmental assessment decision) could be required under the current approach, if all the identified mining proposals proceed. The new approach is anticipated to reduce the number of Order in Council exemptions, thereby allowing for more efficient use of existing resources, within both the industry and the department,” the briefing note says.

(Incidentally, internal government records previously released to Greenpeace Canada show that the idea to overhaul the act, which now protects fewer than 2% of Canada’s waterways, came, in part, from industry.)

The government also won’t be surprised if it’s hauled before the courts, the briefing note states. “The new NPA does not define navigability. A determination of navigability by TC for a given project remains an opinion that may ultimately be challenged by the Courts as a matter of statutory interpretation.”

In the meantime, there’s a massive cleanup job to be done in B.C., where environmental advocates say the provincial government’s decision to cut inspection staff and allow industry to self-regulate may be to blame for the Imperial Metals’ Mount Polley tailings pond disaster.

And here’s the Transport Canada briefing note:

The gutting of the Navigable Waters Protection Act