​Oil and gas the backbone of the Canadian economy: Gwyn Morgan

Oil and gas contributed some $117 billion to Canada’s GDP last year, six times the economic contribution of the Ontario auto industry

Image: Cenovus Energy

What was Canada’s biggest business news story of 2018?

According to the pundits at The Canadian Press, it wasn’t the giveaway of Canadian oil to Americans for tens of billions of dollars below world prices, caused by a lack of pipelines from Alberta.

It wasn’t the loss of tens of billions more in oil and gas investment to the U.S., because Canada is too hostile to building new projects.

It wasn’t the Americanization of Encana Corp., once the largest of all Canadian-headquartered companies.

It wasn’t the federal Liberal government’s forced purchase of the Trans Mountain pipeline from Kinder Morgan because the expansion faced insurmountable opposition from the B.C. government and Indigenous groups. Nor was it the court decision blocking the federal government from completing that project.

Instead, The Canadian Press’s choice of business news story of the year was … the legalization of cannabis.

Given their confusion over what really matters to Canada, perhaps the panel members weren’t only considering cannabis, but smoking it.

According to BNN Bloomberg, annual cannabis revenues are expected to be about $6 billion. Meanwhile, despite receiving far less than the market value for its product, the oil and gas industry contributed some $117 billion to Canada’s gross domestic product last year.

That’s more than six times the economic contribution of the Ontario auto industry, where the closure of a single plant impacting 2,600 workers generated more Canadian Press stories than the layoff of 100,000 Alberta oil workers.

The drastic decline of Canada’s most important industry wasn’t created by just one event or action, but rather a combination of ideological antagonism to fossil fuels and tunnel vision.

Here are my choices for the truly big Canadian business news headlines from 2018. Given how bad the news was, maybe using these to shed some light in that tunnel might help make 2019 better. It could hardly be worse than 2018.

Hundreds of tankers churn up the St. Lawrence Seaway carrying oil from Saudi Arabia, Russia, Iran, Venezuela, Iraq, Nigeria, Angola and Algeria. They’re delivering oil to Eastern Canadians because Alberta oil can’t get there due to a lack of pipeline.

These suppliers are all countries with human rights records ranking vastly below those of Canada. And none of those countries care a whit about carbon emissions.

The proposed Energy East pipeline, running from Alberta to the Atlantic, would have replaced those imports while creating jobs and economic benefits across the country.

Economically-beleaguered New Brunswick is an avid supporter of that nation-building project. But Quebec Premier François Legault insists there will be “no social acceptance for a pipeline that would pass through Quebec territory” carrying Alberta’s “dirty energy.”

When asked about reviving Energy East in year-end interviews, Prime Minister Justin Trudeau could have pointed out that it’s also Canada’s territory and that the federal government, not Quebec, has jurisdiction over pipelines. Instead, speaking to CTV, Trudeau tacitly supported Legault’s assertion by repeating “there’s no support for a pipeline through Quebec.”

Along with B.C.’s attempts to thwart pipelines, that makes two provinces that are getting away with opting into Confederation when it benefits them but opting out when they’re asked to serve the nation’s interest.

Soon after the new premier of Quebec labelled Alberta oil “dirty energy” came news that the federal government had raised Quebec’s so-called equalization grant by another $1.4 billion, to a total of $13.1 billion.

It’s inexplicable that, despite Quebec’s projected $3-billion budget surplus this year, it’s still considered a have-not province.

Meanwhile, Albertans, who face a $6-billion deficit and have recently suffered more than 100,000 job losses, must contribute to Quebec because Alberta is still considered a have province. Painfully aware that their federal taxes are the primary funder of the billions that go to Quebec every year, Albertans are starting to wonder if they’re the ones who should be talking about separation, instead of Quebec.

The federal government was swift to condemn the murder in Turkey of journalist Jamal Khashoggi by Saudi agents. This came after Foreign Affairs Minister Chrystia Freeland had created a diplomatic rift with the kingdom over human rights abuses committed against female Saudi activists.

After Khashoggi’s murder, Trudeau said he would “look for ways” to cancel arms sales to Saudi Arabia, despite contracts having already been signed. That would result in job losses and billions of dollars in cancellation fees and the Saudis could simply buy arms instead from Russia. They could even pay for those Russian arms using cash Canadians send to buy Saudi oil being delivered to eastern provinces.

The real way Canada could send a strong message to the Saudis would be to halt all Saudi oil imports, which have totalled over $20 billion in the past decade.

Despite strong resistance from the resource sector, the federal government continued to push its Bill C-69, which will create a new approval process for resource projects, adding bizarre new criteria including “gender impacts.”

Many in the industry say a pipeline will never be approved in Canada again. Of course, no investor might ever propose one again. When even the Canadian government can’t get its own fully-approved Trans Mountain pipeline expansion built, who else would dare try?

Whistler, B.C., Mayor Jack Crompton sent a letter to Alberta oil companies in November, calling for them to take “financial responsibility for your fair share of climate change being experienced by Whistler.”

Outraged responders pointed out that that the tourist resort’s three million annual visitors burn fuel driving from Vancouver or flying in from around the world. Crompton would have benefited from looking at Environment Canada data showing that three-quarters of greenhouse gas emissions come from energy users, not producers.

I wonder how much happier Crompton would be if the oil industry didn’t supply gas to the tourists who make up his town’s entire economy.

A press release following the UN’s climate conference in Poland trumpeted news that 190 countries had agreed upon a “rule book for putting emission reduction commitments into practice.”

Coal is the most emissions-intensive fossil fuel.

China, which burns over half of the world’s coal, committed to a substantial reduction at the 2015 climate meeting in Paris. But recent research using aerial photography found construction underway on hundreds of Chinese coal-fired power plants.

Meanwhile, India, the world’s second largest coal consumer, continues to escalate its coal burning at an annual rate of six per cent.

Elsewhere in Asia, a veritable frenzy of coal-fired power plant construction is underway. Plants under construction in Vietnam alone will produce far more carbon emissions than all of Canada’s oil and gas industry.

Yet some Canadians still believe we can save the planet from global warming by shutting down our own oil and gas sector.

Canada’s oil and gas industry isn’t only important to Alberta. It’s the largest economic contributor in the country. That’s not news.

What is news is that the events of the past year further demoralized this vital, once-proud industry and its people, whose knowledge and dedication made it one of the world’s best. And that these events resulted in handing Americans billions of dollars in price discounts due to Alberta’s lack of pipeline capacity, while sending billions more in investor capital fleeing south to a more hospitable energy climate. All while fomenting a new national unity crisis.

Putting an end to this appalling mess, reviving Canada’s energy industry and restoring national unity will require wise and decisive national leadership.

Sadly, our current federal government is actually the main cause of these problems.

That makes it very hard to be optimistic about 2019.

© Troy Media

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