What if Alberta oil sands gave Christy Clark a $1.5 billion slush fund?
BC can levy its own tax on Alberta oil sands bitumen
Markham Hislop, publisher of Beacon News
By Markham Hislop
Albertans think BC Premier Christy Clark is either crazy or has a political death wish. How else to explain Monday’s brazen grab for a piece of Alberta oil sands revenue?
Alert readers will recall that Clark released five conditions under which the BC government will consider approving new pipelines from Alberta to the West coast. Already infamous number five says that British Columbia must receive “a fair share of the fiscal and economic benefits of a proposed heavy oil project that reflects the level, degree and nature of the risk borne by the province, the environment and taxpayers.”
Never mind that British Columbians can’t make the simple distinction between heavy oil and oil sands bitumen. This is the kind of knowledge Alberta children imbibe with their porridge. Dang granola munchers…
Dear Beacon readers. Please help us serve you better by filling out this brief survey form. We thank you for your feedback and your commitment to local online news.
Nevertheless, the squealing that emanated from Calgary and Edmonton could be heard in Ottawa – and no doubt was.
Premier Alison Redford wasted no time slapping down the uppity Ms. Clark. In a Postmedia interview, she said in essence the Pacific Ocean will freeze over before BC gets a dime of Alberta’s royalty money.
“To presume that a royalty sharing agreement between provinces is the way to go is really a non-starter from our perspective. My concern is that if we start down this path of thinking that there’s one-off deals or exceptions to that structure, where do you stop?” said Redford, a lawyer by profession who presumably knows a thing or two about contracts.
The one outfit that should have been squealing, but wasn’t, was Enbridge. Spokesperson Todd Nogier calmly told Beacon News that the pipeline company is pleased to continue the dialogue with Clark’s Liberals.
“Enbridge welcomes this input from the BC government. We wish to reiterate our commitment to work with all governments, including BC, in determining what we can do to further address their concerns,” he said.
Nogier might have been smiling on the other end of the phone when he mentioned 460 full-time jobs and the $1.2 billion dollars over 30 years that would flow to Victoria. When Clark said the fiscal and economic benefits from Northern Gateway had to reflect the degree of risk borne by BC, it was implied and everyone understood that British Columbians think there is a very high degree of environmental risk involved with the project. A few jobs in the boonies and a couple of million a year for Victoria clearly aren’t going to pass muster.
Then how to explain Enbridge’s zen attitude in the face of what many consider to be the final nail in Northern Gateway’s coffin?
Maybe, just maybe, Christy Clark is crazy like a fox. And maybe Enbridge has received a few winks and nudges from the Clark team on what’s coming down the political pipeline (pun intended) and isn’t all that unhappy with what it’s hearing.
Everyone knows Clark and the Liberals are in trouble. A May Angus Reid poll put the NDP at 50 per cent and the Libs at 23, trailed by the BC Conservative Party at 19. And Clark’s leadership numbers are pretty much in the toilet.
Which is why many Albertans are scratching their heads and wondering why the Premier would leave the door open for such an unpopular project as Northern Gateway. Certain political death, right? Maybe not.
Take it as a sure thing the Liberals have been polling, frantically looking for voters they can cobble into an NDP-beating bloc. One-third of those polled by Angus Reid are undecided, so that’s one place to start. Then there’s the unhappy business community, many of whom have been siphoned off by the upstart Conservatives.
A big pot of Alberta oil sands money the Liberals could use for healthcare or business development programs might appeal to those voters.
And it never huts a BC politician to pick a fight with the Republicans (sorry, Progressive Conservatives) over in Alberta.
But how to persuade Alison Redford to part with her precious Alberta oil sands royalty money? Well, who says Clark has to? Redford was working on that assumption, but it may be incorrect.
David Farrell is a professor in the transportation and logistics division at the Sauder School of Business, which is part of UBC. He says Clark doesn’t have to ask Redford to share Alberta’s pie because BC can levy its own tax or tariff on oil sands bitumen moving through the Northern Gateway pipeline. There are precedents in BC’s history, such as tolls imposed by the Vancouver Port Authority on Saskatchewan and Alberta grain shipped to international markets.
Alberta producers would receive between $15 and $25 a barrel more for oil shipped to Asia, according to estimates by the Fraser Institute. Let’s say for sake of argument that BC slapped a $5 a barrel tax on Northern Gateway. With an expected capacity of 525,000 barrels a day, the BC government’s take would be $2,625,000 per day and just under $1 billion a year.
And let’s not forget the proposed expansion of Kinder Morgan’s Trans Mountain pipeline by 300,000 barrels a day. That little project would net BC $1.5 million a day and $547 million a year under my hypothetical scenario.
That would give Clark a slush fund of $1.5 billion per year that she could use to promise faster hip replacements for seniors, new schools for high immigrant population communities like Surrey, and lower taxes for businesses still mad about the HST.
The Liberals would appear pro-economic development and present a clear alternative to the Adrian Dix and the NDP.
Not a bad strategy if you’re a desperate politician like Christy Clark.
As I wrote in yesterday’s column, Alberta shouldn’t get its panties in a bunch, a Northern Gateway deal is coming. It may take a few months and there will be plenty of brinkmanship on both sides (Alberta will want to pay as little as possible), but the stakes are too high for both sides to just walk away.
Enbridge doesn’t sound like it wants to. Clark has put her cards on the table in the face of formidable opposition from environmentalists.
Let the high stakes poker begin.
Category: Opinion
Subscribe
If you enjoyed this article, subscribe to receive more just like it.
