U.S. President Barack Obama will soon announce his decision about the controversial Keystone XL pipeline. Opposition to the pipeline has been growing. We have seen celebrities seeking arrest in front of the White House this summer, and an open letter to Obama from Nobel laureates, including the Dalai Lama. Opposition to the pipeline has been based almost entirely on environmental grounds, from protecting the Ogallala aquifer to ending the use of “dirty oil.”
Proponents of the line counter with economic arguments, citing potential investment and jobs in both the U.S. and Canada. Thus we see a classic “jobs vs. the environment” argument being played out in both countries.
But do the economic arguments of the pipeline proponents stand up? Will the pipeline, which will dramatically increase the export of raw bitumen from Alberta to the U.S., bring significant new investment and jobs? The answer is, “Yes and no.”
“Yes” if you are the United States and “no” if you are Alberta.
Alberta’s NDP wants bitumen to be upgraded here in Alberta. So do other organizations, including energy and construction unions. Increasing the amount of value added before export will increase investment, jobs, and tax revenues in our province and in Canada as a whole. This has been acknowledged by the Progressive Conservative government. Before the 2008 provincial election, Ed Stelmach likened the export of bitumen to “scraping the topsoil off your farm and selling it.” He promised to reduce the amount of bitumen being exported from Alberta.
Of course, he did nothing of the kind. The percentage of bitumen being processed in the U.S. has steadily risen since the 2008 election, and now the government is talking positively about an increase from the current 1.3 million barrels to six million. Almost all new oilsands projects will involve upgrading in the United States. Tens of thousands of new jobs are being created in the U.S. building or upgrading refineries on the Gulf coast and in the Midwest, based on upgrading Alberta bitumen. Potential jobs for workers in Alberta and the rest of Canada are literally going down the pipe to the U.S. Ironically, Stelmach is now touting the oilsands as the “economic engine of the U.S.A.”
A report on Keystone XL dated Aug. 12, 2011, and prepared for the U.S. State Department and Department of Energy, confirms this. It states: “Any no-expansion (of Keystone) scenario could increase the incentives for expanding such capacity. To the extent this happens, and leads to the export of product not bitumen to the U.S.A., it will shift refinery/upgrading processing, investment, jobs and ‘value-added’ from the U.S.A. to Canada.”
The United States understands the value of the Keystone expansion to their economy. Unfortunately, this will come at our expense. Why, then, is our provincial government enthusiastically supporting this project?
The answer lies in the far-too-cosy relationship between the Progressive Conservatives and the oil industry. Over the past 10 years, the PC party has received millions of dollars in donations from oil companies. Industry representatives sit with Tory politicians and bureaucrats to make provincial energy policies. And PC leadership hopefuls recently held private debates in front of the Canadian Association of Petroleum Producers, the industry’s lobby group. This relationship is extremely unhealthy. The provincial government represents the owner of the resource: Albertans. Its present relationship with the corporations that enter into leases to extract the resource represents a massive conflict of interest.
The results are plain to see. Poor environmental regulation, billions of dollars in unfunded liabilities for future cleanup and some of the lowest royalties in the world mark this government’s failure to stand up for Albertans.
While other oil-rich countries such as Norway have dramatically raised the standard of living of all citizens, average Alberta families still struggle to pay their bills each month and hundreds of thousands still live in poverty.
It’s time for a government that takes its job as steward of Alberta’s resources for all generations seriously. That requires establishing an appropriate, arm’s-length relationship with the corporations that extract those resources. An NDP government will strengthen conflictof-interest rules, close loopholes in the lobbyist registration legislation and eliminate corporate donations to political parties.
Alberta’s natural resources give an opportunity to create prosperity and quality of life unparalleled in Canada. We must develop them thoughtfully and in the interest of all Albertans. We all own them together and we all must benefit.