A National Energy Policy?

The National Post, on Saturday the 26th of May, 2012, at the beginning of the Financial Post section, had a large article by Claudia Cattaneo regarding “The Trouble with Resetting Canada’s Energy Spine”. TransCanada Pipeline was looking to raise rates or even switch its namesake pipeline from gas to oil, which may create a huge controversy.

I read the article carefully, and as far as I can see, what it amounts to is offloading the costs of shipping western oil east onto Western Canadian consumers. I quote the article, as follows:

“After years of unsuccessful negotiation, TransCanada presented a restructuring proposal to the NEB (National Energy Board) in the fall it says achieves ‘the greatest good for the greatest number’ – but that doesn’t seem to make anyone happy. It’s the reason the proposal has landed before the NEB for a ruling.”

My comment is that the greatest good for the greatest number generally means the greatest good for the people of Ontario and Quebec where this pipeline will end.

Quoting further, the article says:

“Western Canadian gas producers find many of TransCanada’s arguments outrageous and its restructuring proposal a way of transferring Western Canadian wealth to the East.”

This, to my mind, is exactly what has happened all too often in the transfer of wealth from the energy sector to the consumers of Eastern Canada, so they can have cheap gas and oil. It is, in effect, requiring Western Canadians to pay and subsidize the main line to Central Canada. The article goes on to say:

“Western Canadians find it ‘very offensive’ that the regional carrier, NGTL, might subsidize the Mainline, said Nikol Schultz, vice president for pipeline regulation and general counsel at the Canadian Association of Petroleum Producers, which will represent producers interests at the hearings.”

The article concludes with the suggestion that probably it would be better for Eastern Canada to pay the world price for oil and gas, relying on the shale gas production from the Eastern United States, rather than having it shipped all the way from Alberta on a “Canada Mainline.” The article in its final paragraph says:

“Whether it’s in the business of shipping oil or gas, producers believe it’s time for TransCanada, as the owner of the mainline to start bearing the risk of its choices, rather than shifting it to others.”

In my opinion, shifting it others (Western Canadian gas consumers) is exactly what the NEB and TransCanada are likeliest to do. In the present political climate, no Western Canadian Prime Minister is ever going to rock this boat when it would cost him the votes of Ontario and Quebec.

Therefore, I find this whole controversy another strong argument why Western Canada should not be trying to ship its gas and oil to the consumers of Eastern Canada, but rather should be shipping it to the port of Prince Rupert, from where it can be sold at the highest possible price to the consumers of Korea, China, Japan, and probably in the future, India and Indonesia.

There is no long term benefit from a pipeline that ships oil and gas from Alberta to the consumers of Quebec so that they can have cheap energy at the expense of Western Canadian consumers or oil and gas producers. Let the revenues from the resources remain in the land where the resources come from and you will see a developing industry, secondary manufacturing, and a reduction in the costs of living and taxation that Western Canada has every right to expect from retaining the ownership, use, and profit from the resources located here for the long term benefit of Western Canadians.

This is something Ottawa can never do for us, and the National Energy Board as they call it will simply do the political thing again, and make the people of the West subservient providers to the consumers of the East in the interests of the political survival of whatever party happens to be in power in Ottawa.