Notley's threat to cut off oil exports to B.C. a political gamble, says analyst

Rachel Notley’s threat to cut oil exports to British Columbia in the battle over the Trans Mountain pipeline is a gamble which could backfire for the Alberta premier, says an Edmonton political scientist.

In last week’s throne speech, Notley invoked Peter Lougheed as she promised to halt the flow of oil west, if B.C. continues to block construction of the pipeline expansion. 

The tactic is a bit of political theatre borrowed from her predecessors, said Jared Wesley, an associate professor of political science with the University of Alberta.

“We’ve seen this escalation over the past number of years and this is just the latest salvo, but I’m not surprised that the tone was quite familiar,” Wesley said Monday in an interview with CBC Radio’s Edmonton AM.

“It shouldn’t be surprising to Albertans that a premier who grew up in this province and saw premiers like Lougheed and [Ralph] Klein find enemies outside the province and pick fights with them, and see that work for them [would do this].

Makes opponents cheerleaders or traitors

“It helps marginalize her opponents within the province, turning them into either cheerleaders or into traitors. Casting herself as a kind of guardian to the province is something she is banking will pay off for her too.”

Notley is eager to see the Trans Mountain project move forward, allowing industry to ship oil overseas through West Coast ports and funnel more resource money into the provincial treasury.

The fight over the project, which would carry Alberta bitumen through B.C. to the coast, has pitted the two NDP-led governments against each other for months.

The spat became more heated earlier this year when B.C. said it would not allow increased oil flow until more research is completed on pipeline safety and spill response. B.C. backed down after Alberta suspended imports of B.C. wine.

On Thursday Notley said in her throne speech she would, if pushed, replicate the actions of former premier Peter Lougheed who in 1980-81 reduced oil shipments over several months and cancelled two oilsands developments after the federal Liberals introduced the national energy program with its price controls, new taxes and revenue sharing.

Notley has said no restrictions will be introduced without extensive consultation with industry. 

‘Peter Lougheed paid a price’

Alberta has used its oil and gas exports as leverage at least three times in the past to win arguments with other levels of government. But it hasn’t always paid off politically, Wesley said.

Lougheed’s policies during the so-called energy wars with Ottawa were deeply unpopular with Alberta industry, he said.

“We have to remember that Peter Lougheed paid a price,” West said. “When he took measures like cancelling leases and increasing provincial royalties, the oil industry was not happy with that.

“So the premier’s office is again going to be thinking about, ‘What’s the right balance? Can we convince people in the industry to take short term pain if there is a potential for long term gain?’ “

‘You have to be very careful not to solve different problems with the same solution.’ – Jared Wesley

Notley’s latest tactic could draw the same ire from industry — and hurt her chances in the looming provincial election, Wesley said.

“The problem is the same, in that Alberta is being disadvantaged by low oil prices, but the source of that problem is very different,” he said.

“Back in the late 70s and early 80s we could heap some of the blame on the federal government for their policies on export taxes and federal royalties.

“But today, [the problem is] pipeline capacity so you have to be very careful not to solve different problems with the same solution.”

Alberta has right to restrict exports

The Alberta government still has the legal right to restrict exports of oil and gas by withholding “removal permits,” said Bob Skinner, executive fellow with the School of Public Policy at the University of Calgary, whose career included stints in the federal energy department, industry and academia.

However, he thinks there is a “very low chance” that Notley will actually implement export cuts because her threat echoes a previous suggestion by Opposition leader Jason Kenney, who could be the next premier.

“She does not have to do it because what she’s done is take an arrow from the quiver of Jason Kenney, so the signal to British Columbia and Premier (John) Horgan is, ‘If you think I’m a toughie, just you wait. I’m offering you a basis for negotiation. I don’t think you’ll get that if somebody else is here.’ “

‘There is no giant tap in the basement of the leg that we can just turn off.’ – Jared Wesley

Prime Minister Justin Trudeau said Friday that the Alberta-B.C. dispute over Kinder Morgan’s Trans Mountain expansion plans isn’t the first time provinces have disagreed on a project, adding that it’s important the federal government show leadership now.

“What I have been very clear about is that this project is in the national interest and it will get built,” Trudeau said in Regina.

The Trudeau government approved the Kinder Morgan project in 2016, but the pipeline has since faced permit fights and challenges from the B.C. government. The $7.9-billion expansion would triple the amount of Alberta bitumen going from Edmonton to the port in Burnaby, B.C.

Wesley remains curious to see how the Notley government will deliver on its threat.

“There is no giant tap in the basement of the leg that we can just turn off,” Wesley said.

“We really can’t tell until we see the piece of legislation as to whether it’s constitutional or not.

“Certainly there is constitutional wiggle room for something like this and there is precedent.”

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