Alberta’s energy sector is the goose that lays golden eggs for Canada.
It has attracted millions of young, hardworking people to Alberta. It is the reason why Alberta contributes more financially to Canada than any other sub-national region in any other country contributes to its central government.
Quebec is sustained by equalization dollars that come from Alberta. If Ottawa has tax revenue to distribute as equalization, it is because hardworking Albertans and the energy industry are paying those taxes.
Ottawa benefits from all the wealth that Alberta’s energy creates, so much so that a two-month cratering of Alberta’s oil prices in the last quarter of 2018 slashed national GDP growth to zero.
That massive financial benefit is now at risk because of short-sighted decisions by politicians.
Alberta has oil that the world wants to buy, that Canadians want to buy, but Canadian politicians don’t want to make the reasonable accommodations that would let us sell it.
Recently politicians have been focused on the Trans Mountain pipeline expansion (TMX). That is good, but we need more than that. TMX isn’t enough to make Albertans stop worrying about being taken for granted by Canada and it isn’t enough to ensure Alberta’s and Canada’s long-term prosperity.
Alberta produces just under four million barrels of oil per day (bpd). We consume about 25 per cent of that in Canada and we sell the rest to Trump’s America — at a discount.
America is our only foreign customer. They are also our top competitor.
Because of fracking discoveries, the U.S. is now the world’s top producer of oil. They don’t really need our oil and they need less every day. That is part of the reason why our oil sells at a discount that Alberta’s former NDP government concluded was costing the Canadian economy $84 million a day.
TMX will hardly change that.
If TMX is finally built it will send a further 590,000 bpd to Vancouver. That helps, but only a little.
It’s a dirty little secret that most of the new TMX oil will be sold to U.S. west coast refineries. Very little of it will go to China, Japan, Korea or India, despite the fact that all of them want it. At most TMX will sell a few hundred thousand barrels a day to Asia.
You see, Vancouver’s shallow port can’t accommodate modern supertankers.
The cost advantages of transporting Alberta oil in efficient supertankers will never happen via Vancouver. And that means TMX alone won’t lead to a growing Alberta energy industry.
If Alberta’s energy industry isn’t growing, it will never again fill the 30 per cent of downtown Calgary that is currently empty. It’s that simple and that bleak.
Canada needs a growing energy industry in Alberta. To be successful we need to sell more than two million barrels a day to a customer that isn’t the Americans. That’s Asia or, better yet, Canada.
What Alberta needs is a deep-water export pipeline to Asia or the Energy East pipeline to eastern Canada. Either would lead to a booming Alberta economy, which could sustain the Canada we all know.
That is what Alberta would have, if we were the only decider on this file — if just economics went into making this decision.
It’s time our politicians were honest with Albertans and Canadians.
TMX is a start, but it isn’t enough.
We need to work on a solution that gets Alberta a customer, other than the Americans, for two million barrels a day of oil.
That customer should be the rest of Canada.