It’s alarming that Montreal’s mayor shot off his mouth last week in an attempt to block the Energy East pipeline project to bring oil to Quebec and the Atlantic provinces for consumption and export.
This followed a decision by the B.C. government to oppose expansion of an existing pipeline, the Trans Mountain line, to bring oil to the Pacific Ocean.
Both represent unacceptable sabotage of Canada’s national interest as well as an economic inflection point.
Protectionism by provinces has been allowed to balkanize and stunt the Canadian economy, and reduced politics to posturing and trade-offs among provinces allowed to behave as though they were sovereign nations.
But the issue of getting Canada’s oil to export markets is no trifling matter.
The current Prime Minister cannot do as others have before him and play the provinces one against another and pick favorites, namely Quebec.
The greatest national disappointment to many is that Ottawa has always had the power to stop this nonsense. The Constitution Act (Section 91(2) gives the federal government (Parliament) exclusive authority over trade and commerce.
“This has been judicially interpreted to mean trade and commerce concerning all interprovincial trade and trade the country as a whole,” wrote Lawrence Herman, a Toronto lawyer and trade, investment and public policy expert.
Instead of imposing its powers Ottawa has engaged in “endless bargaining” with provinces to find some cooperative model, he added.
“Many of us strongly believe that section 91(2) needs to be trumpeted, as a means of Parliament legislating to break down provincial barriers, not engaging in these agreements as if the provinces were separate sovereign states,” he wrote.
Instead, this country’s agenda has been dominated by quarreling sub-nationals and horse-trading. By contrast, the United States settled this nonsense in 1887 by creating a fourth level of government, the Interstate Commerce Commission, to insure that legal goods and services moved freely across state lines. This created the world’s first truly national economy.
But here we have Quebec and British Columbia protectionists impeding delivery of a legal commodity, thus damaging the living standards of all Canadians.
(Interestingly, European Union negotiators realize that there is an absence of Canadian-wide economic management so the EU-Canada trade agreement has been bogged down because Europeans insist that each province and territory signs off on terms.)
Not only must the new Prime Minister address this national shortcoming, but he now faces a request to approve another nation-building infrastructure oil project from the Assembly of First Nations. In 2012, the Assembly endorsed an oil-by-rail project that would carry at least 1.5 million barrels of oil per day from Alberta to Valdez Alaska.
This is a “politically correct” proposal, and unique in history, because it has been proposed and approved by First Nations, as well as by Alaskan Native Americans, all along its 2,400-mile route. In other words, the social contract was reached first, not sought later.
Besides aboriginal approval, the governments of Alaska and Yukon also endorse the railway. Alberta’s former government undertook a pre-feasibility study that has been delayed for months.
The developer is G Seven Generations Ltd. in Vancouver and the railway would be a 50-50 partnership with aboriginal groups. It would require loan guarantees, from the federal, Alberta and Alaska governments, and private sector equity partners.
Early estimates were that the railway with a single track would cost US$8.4-billion and carry 1.5 million barrels per day. A twin-tracked railway would cost US$10.4-billion and transport up to five million barrels daily. In addition, the line would provide an alternative transportation route for commodities and equipment going to and from landlocked western provinces plus spark development along the route.
The project has two other advantages. Oil by rail does not require a permit, as oil by pipeline does, and the oil will be shipped to Asia without going through Canadian waters.
So now Canada and its new Prime Minister arrive at a moment of truth. Three nation-building pipelines — the expansion of the existing pipeline through British Columbia, Energy East and G Seven Generations’ oil-by-rail — are shovel-ready infrastructure megaprojects that will underpin existing living standards until solar power begins to replace fossil fuels by 2035 or so.
Does Canada optimize the assets it has now in order to meet the enormous financial challenges of transitioning into emerging technologies? Or do we allow petty politics to sabotage the nation’s only engine of economic growth and job creation?
The answer is obvious. Oil is our future for at least another generation. Clearly, cannabis, or catering to Quebec or crybaby protectionism, isn’t going to cut it.
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