B.C.’s pipeline bargaining position stirs Alberta outrage, but makes political sense

Alberta Premier Alison Redford, left, negotiates with B.C. Premier Christy Clark, holding carrot, as seen by the Alberta media. Actual neo-conservative Western Canadian politicians may not appear exactly as illustrated. Below Ms. Clark, Ms. Redford and former Tory insider Norman Spector.

Christy Clark’s bargaining position in the squabble between British Columbia and Alberta over provincial pipeline danger pay may be unconstitutional, and it may not be “legal” in the sense of commercial or common law. But it doesn’t need to be. That’s because it sure as heck makes political sense!

It makes good sense politically both from the point of view of the fundamental political challenge the British Columbia premier faces in her home province, and from that of managing a successful negotiation over time with Alberta Premier Alison Redford.

What’s more, at least for playing cards with Alberta, Ms. Clark holds a better hand right now than Ms. Redford does. For, practically speaking, while she may not be able to, or even wish to, block the Enbridge Northern Gateway Pipeline forever, she can certainly hold it up for a time.

That’s a big advantage when to survive politically Ms. Clark needs to delay the project as much as possible while Ms. Redford and Prime Minister Stephen Harper are in a hurry to push the line through – presumably because they understand opposition to the project will only grow over time, not just in B.C. but right across Canada.

With the New Democrats under Adrian Dix high in the polls and thought by most British Columbians likely to be the most effective opposition to a project that is almost universally despised in B.C., Ms. Clark had better have a pretty darned compelling argument if she wants to sell the idea to voters before the province’s next fixed election date on May 14, 2013. More likely, the conservative “Liberal” would prefer just to kill all discussion of the scheme until after the election. At that point – in the seemingly unlikely event her government survives – B.C. and Alberta can talk turkey.

This gives rise to the conspiracy theory that last Thursday’s closed-door meeting between the two westernmost premiers was just a pillow fight staged for a gullible public’s benefit, with the goal of creating a palatable “compromise” for public consumption.

It’s easy to see why some people might jump to this conclusion. After all, if there’s one thing British Columbia New Democrats have embedded in their political DNA it’s the instinctive knowledge it’s easy for their party to snatch defeat from the jaws of victory!

Still, upon examination this notion stretches credulity. Anything’s possible, of course, but it seems unlikely the B.C. public is inclined just now to accept any deal with few benefits and involvement by Enbridge, and the longer this scrap goes on, no matter how contrived it is, the less likely an agreement becomes.

Moreover, as former federal and B.C. Conservative eminence grise Norman Spector accurately observed on CBC Radio 1 Tuesday afternoon, Ms. Redford’s initial position makes no sense unless she’s already concluded one of two things: Either the prime minister will intervene for her and ram the project through, or thanks to the Michigan misadventures of the Keystone Kops running Enbridge, the project is already deader than the proverbial mackerel.

The first of these two possibilities seems less likely than the second, since the political cost for Mr. Harper and his Conservatives could well be as severe as the fate that surely awaits Ms. Clark if she takes even a single wrong step.

On the other hand, if the Enbridge project really is dead, what does it benefit Ms. Redford to start giving away her Progressive Conservative government’s negotiating positions now? After all, whatever positions she offers up now will by default become her new starting position if real negotiations over a new proposal start later. Like most Alberta politicians, Premier Redford is unprepared to consider the one thing that would make the whole idea easy to finance – that is, charge something more than the giveaway royalty rates now collected for this resource.

Still, while Mr. Harper grimly plots, it’s always possible Ms. Redford is merely having a temper tantrum, so unused are Alberta Conservatives to being challenged by anyone with sufficient political clout to thwart their wishes even for an instant.

Meanwhile, the brouhaha is distracting Canada’s premiers from the one file they should be working on at their meeting in Halifax: holding the prime minister’s feet to the fire to provide sufficient funding to keep Canada’s public health care system viable.

Speaking of tantrums, all the usual suspects in the far-right media are certainly having a full-blown hissy fit about this, with Ms. Clark being accused of setting up an economic blockade of Alberta, or practically declaring war. In the words of one particularly hysterical Sun News bloviator, her actions are un-Canadian, unconstitutional, unfair and un-neighbourly!

While nobody in the Alberta media has called just yet for Alberta to separate from Canada – which, if you think about it, might actually make the problem of not having a salt-water port a little worse – it wouldn’t come as much of a surprise in this atmosphere. The On-line Tory Rage Machine here in Alberta, after all, is just tuning up.

The grown-up media, meanwhile, is also putting on the full-court press for the project, although in complete sentences and without swear words. Don’t worry, there’s no need to Alberta to pay anything to B.C., because “compensation will likely flow through fiscal back channels,” the Edmonton Journal soothes, quoting a business professor’s vague bromides.

Ms. Clark’s position may or may not be constitutional – that’s far from clear since we’re taking about an agreement between two provinces. It’s not as if she’s proposing that Ottawa just take the money and give it to her.

But you can hardly call her un-Canadian or unfair for looking out for her own voters’ interests, however reluctantly, and it’s not entirely clear which province is being more un-neighbourly in this particular neo-Con dust-up.

Meanwhile, her proposal sounds like common sense to many Canadians. Why shouldn’t a province be compensated for bearing most of the risk in a dangerous long-term project run for someone else’s benefit by a company with a proven track record of perpetrating environmental disasters? Is this so different, say, from seeking compensation for a dam that restricts the flow of water from the province next door?

And isn’t it interesting how the same far-right commentators and politicians who screeched for a year about “property rights” at the thought of high-tension power lines running through some Alberta farmers’ fields, now argue British Columbians in the same position essentially have no property rights at all when the concept might impede the flow of the greasy bitumen they champion to the refineries of China.

Come to think of it, the fact that China has a Communist government doesn’t seem to much bother these, er, red-blooded anti-Communists any more either, now that there’s some filthy short-term petro-lucre to be made out of the deal.

Hypocrisy? Oh well, that just goes with the ethically oily territory!

This post also appears on Rabble.ca.

13 Comments on "B.C.’s pipeline bargaining position stirs Alberta outrage, but makes political sense"

  1. Martin says:

    First off, I think if Clark wants more money, she should be talking to Enbridge, not Alberta. Why should revenue going to governments(the people) be divided up? They are just getting table scraps anyway, and they are FIGHTING for them. Go to the honeypot if you want honey.

    Secondly, and I’ve never seen this addressed, I would like to know precisely HOW the pipeline benefits Alberta financially. The argument, a correct one, is that we get crap money for our oil compared to the international market. So I’d like to know how much revenue is estimated to go to Alberta with this pipeline. I understand its tough to estimate what price we will get for the oil, but surely someone has researched these numbers. And once we get that extra funding, what is the plan for it? Toss it into general revenue? Special fund for development of clean energy(ya, right!)? Hospitals? Give the people something solid to support, and maybe we will consider it. As it is right now, as an Albertan I see little reason to sell out our oil industry to China.

  2. Liza says:

    A “pillow fight”? Really? I heard this term used on the radio the other day in reference to this conflict and was irritated but unsurprised at the sexist language. But to hear it repeated over here? Do you really think a conflict between two male politicians, regardless of the fluff involved, would be characterized in this fashion? Between Brad Wall and Dalton McGuinty? Come on, David. I’ve come to expect more from you.

  3. kirbycairo says:

    I don’t understand why you seem to be under the impression that a Premier of BC could not block a pipeline such as the Northern Gateway. There are countless ways that a provincial government could stop such a project. If nothing else they could simply pass strong legislation concerning environmental restrictions on any such projects and make it de facto impossible for any such pipeline project to go ahead.

  4. rangerkim says:

    1. Martin has a good point. Whatever Clark hopes to get will be gotten from Enbridge, not Alberta. So, why is Redford saying anything at all? She is certainly not compelled, as Premier, to say anything. On the other hand, as a trained and paid for shill for the petrocorps she is required to shed crocodile tears and bemoan the end of the world (as we know it). I notice that Enbridge has not said a word about this, nor has CAPP. Why not, I wonder? This is a deal between a commercial enterprise and a state. My opinion is that Alberta has abdicated any sense of ownership and responsibility for natural resources for at least a generation and now everyone “knows” that the resource “belongs” to the corp so of course they are righteously indignant that someone, anyone would dare to question that orthodoxy.
    2. Fair compensation for risk taken is a fine concept for lending money or buying debt. But hey, lets not forget just how badly we misunderestimated that concept over the last decade. In any case, the risk in this case is not that the lender will lose their money; the risk is that the terrestrial environment will be irreparably destroyed by a pipeline and the marine environment will be irreparably destroyed by a tanker spill. Risk = probability x consequence. The probability is extremely high, a virtual certainty the farther out in time you go. The consequence is unimaginable. So the risk is … infinite. Quite properly there is no amount of cash to compensate for this disaster-in-waiting. So, why are we talking about it? Are we, the readers (and writers) of this blog, the citizens of this great land so incapable of having a proper conversation? Must we always be slaves to the great media machine?
    3. Why is it necessary to ship this oil to China? For a higher price? Of which 100% will go to Enbridge shareholders. For sure Hardisty gets the lowest oil price in N.America. Does that really surprise anyone? But the Canadians on the East Coast pay a higher price. I would not be surprised if they pay close to Brent. So why not pipe this oil east instead of west? Why not refine it in Canada? At least that environmental risk is measurable. Just who is in charge of making decisions about the fate of Canadian resources? As an addendum to this point: Every oil producing nation on Earth owns all or has a controlling interest in their petro resource except Alberta and the US. Now, we are ever so excited when the state-owned oil corp of China comes in to buy not 1 but 2 (and counting) tar sands companies. And we have nothing! Who indeed is calling the shots?
    4. If it’s so important to sell this stuff to Asia then let’s at least use the benefits derived from the global warming the use of this product has produced. Send the damn pipeline down the Mackenzie and ship it out the Arctic Ocean. It’s mostly ice-free now and is certainly much less hazardous route than down the Douglas Channel and along the BC Alaska coast. The Mackenzie pipeline route is almost flat the whole length and has had a whole generation of time to work out the social and environmental kinks. Given the $0.8 billion and the $20 billion (and counting) cost of the Kalamazoo and Gulf spills, respectively, the cost of building a pipeline across 1000 km of muskeg and permafrost can’t be that prohibitive.
    5. Finally, with all this, why is it ridiculous to talk about alternative sources of energy? Why is it still ridiculous to talk about limits to economic growth? When do we wake up and start (just start, mind you) to recognise our responsibility to the other species and the physical world we live with?

  5. david says:

    I must live a sheltered life, free of pillow fights. Liza takes me to task for using a sexist phrase and I feel appropriately chastised. I meant it merely in the context of a staged battle without blood or rancour, merely a sham. But when I Google the phrase after reading Liza’s comment and see references to a “pillow fight league in Toronto bars,” I realize that it likely wasn’t big burly guys with biker tattoos doing the fighting, although the thought may have potential. As penance, I promise to use the phrase to describe a similar fight between two male politicians as soon as the opportunity arises – the image of Mr. Wall and Mr. McGuinty going at it, feathers flying, is an arresting one.

  6. Alex P says:

    Most here in the oil rich province of Albertastan seem to averse to having an oil company pay their way out of a jam. Who will pay off British Columbia? (Not Enbridge.) Will it be Alberta? (Not Enbridge.) The federal government? (Not Enbridge.)

    The invisible hand of the market is too busy wiping invisible tears from its invisible face to admit to the fact that charging non nearly enough in oil revenues amounts to a subsidy. Or that, much like peeing in a pool, it’s hard to pretend that the neighbouring province has no environmental jurisdiction if the oily muck in the pipe happens to come from our sands.

    Wait for it… someone will say BC is our Sudetenland.

  7. Filostrato says:

    “…compensation will likely flow through fiscal back channels…”. Why do those words sound like an overenthusiastic use of prunes in the diet?

    A couple of years ago, I read that the upcoming NA oil wars were going to be pipeline based rather than oil based, i.e. who gets to build another pipeline? Canada, and North America generally, is oversupplied with pipeline capacity. There were also questions as to whether pipelines could be converted to carry, for example, water to drought afflicted areas south of the border. However much they protest, we know that Canada’s restrictions against bulk water export could be overturned in the blink of an eye, thanks to the Con strong, stable majority dictatorship…ahem, government.

    One other thing – oil prices are hovering around $80 a barrel at the moment due to decreased demand (that happens when you devastate economies, I’ve heard) but tar sands bitumen extraction, to be profitable, needs a price somewhere in the $130-a-barrel range. So, where’s the other $50 per barrel coming from? Is every Canadian subsidizing the oilygarchs every time they fill up their gas tanks? Say it ain’t so, Joe.

  8. DAN says:

    You are missing the whole point. BC is mostly unsettled landclaim. Aboriginal Title overrides the Constitution ruled by the Supreme Court of Canada. What Christy didnt say is the DEAL is already dead because both the BC Govt and the Feds lost to the First Nations of BC in Delgamuukw.

  9. MoS says:

    My decades-old and deeply embedded Conservative friend in Ottawa keeps telling me the pipelines are kaput. Maybe but that’s not Harper’s or Alberta’s style. What I do know is that these bitumen tubes are set to launch a measure of civil disobedience unlike anything Canada has seen.

    We’re talking about this. We’re talking about tents and sleeping bags, chartering buses, all the minutiae. We’re talking about what it will be like for law-abiding geezers to get arrested, get criminal records for the first time in our lives. We’re talking about how many times we’ll have to get arrested and jailed before we bring this beast down.

    British Columbia may not have a constitutional leg to stand on. Our Liberal in Name Only premier might think she can turn this into a shakedown. If Ottawa and Alberta relent it will make the opposition more difficult but also more determined, insistent. If the constitution won’t protect us and our province, civil disobedience is the legitimate extra-constituional remedy. That is the nexus at which revolt is birthed.

  10. Tony says:

    Ms. Clark’s performance doesn’t make political sense. Her petulant performance exposes her lack of political skills. She’s dead in the water in terms of re-election, and hardly anyone in BC seriously believes the Liberals are against the pipeline. The more she paints herself into a corner, the more embarrassing she becomes as BC’s premier. She’s not really, “fightin’ for BC” she’s fighting to salvage something from her political career, before she goes back to radio, or the senate.

  11. rangerkim says:

    I sure hope you haven’t closed this thread David.
    Here is a leader we can all get behind: http://youtu.be/t5MgIbhqEMw
    Here is an anthem that says it all : http://youtu.be/LkjIkuC_eWM

    This is her world we are talking about. Talking about stealing every natural gift and trashing the place to boot. It would make the Grinch proud!

  12. Joe Thibault says:

    All indications are that BC Premier Clark is winning the PR wars in advancing her cause in the Canadian media. Priceless free plubicty when you consider she does not have to pay a dime from her election campaign funds.
    Premier Reford meanwhile contimues with her strategy ($200,000 spent to date on international trips) of “lets talk to international elites” campaign to “raise Alberta profile”. Her priorty should be to advance the cause of Alberta’s intersts within Canada escpecially in BC via the media.
    Any way’s here is my advice to Ms Redford stand up for Alberta and start disscusing the issues outlined below with British Columbians and Canadians… Not the British or the Bilderberg group.

    Politicians, Pipelines and Royalties: the fight for fairness or political expediency?
    BC Premier Christy Clarks call-to-arm’s for BC’s Fair Share of Alberta oil royalties flowing through the proposed Northern Gateway Pipeline has no legal , logical or moral grounds for support.
    Let’s put aside all the political rhetoric, brinkmanship and “barn-storming” that occurred this past week, and pardon the pun – drill down a little deeper into the facts surrounding this issue:
    BC has 50,000 km of pipelines currently operating in the province and 7,000 wells producing 3,000 million cubic feet of natural gas per day. The BC government generated $300 million of royalty revenues in the fiscal year 2010/2011 and is expected to generate $850 million dollars a year in royalties by 2015 through Liquefied Natural Gas exports to Asia.
    BC has lower natural gas royalty rates: maximum rate is set at 27% compared with Alberta’s maximum rate of 36%.
    In 2007 Alberta increased its natural gas royalty rate to a maximum rate of 50% because then Alberta Premier Stelmach wanted a “fair share” (exact quotes) for Alberta. The result was a sharp downturn in exploration for natural gas in Alberta and increased levels of drilling in British Columbia and Saskatchewan because these provinces had lower royalty rate regimes. Alberta in 2009 seeing the error in its ways went back to the 36% royalty rate which is still higher than BC’s and Saskatchewan’s rates.
    The remedy for Premier Clark is pretty simple, before asking Alberta for its cut of oil royalties flowing through the Northern Gateway pipeline BC could do the following:
    1. BC could increase its Natural Gas Royalty rate from 27% to 36%, the same as Alberta. A 33% royalty rate increase would add $100 million dollars a year to BC government revenues.
    2. BC could charge pipeline operators for higher lease and right of way rents on crown lands. These right of way rents do not include the cost of damages caused by the pipelines. These costs to remediate the land/water remain the responsibility of the pipeline operator. Whatever costs the province incurs for pipeline cleanup are paid as compensation by the pipeline operator, in this case Enbridge.
    3. BC could implement its own environmental and cleanup tax on pipelines and wells to build up a fund for enhanced pipeline and well monitoring and environmental stewardship.
    4. Municipal Taxation: Alberta taxes Machinery and Equipment where British Columbia does not. Alberta Taxes the depth of the well based on the cost to drill and complete a well, whereas BC only taxes the value of the surface well lease and not the down-hole pipe to complete the well. How much property tax revenues are BC municipalities losing because of this BC provincial policy
    All these options are within the jurisdiction of the province of British Columbia to create more royalties and tax revenues and Premier Clark has the power to raise more tax and royalty revenues in British Columbia. (but heed Alberta’s mistake in 2007 of raising taxes and royalties too fast and too high, it slows or stops energy development)
    These discrepancies of provincial royalty and tax policies also demonstrates the need for provincial governments to co-ordinates tax and royalty programs rather than trying to compete with one another for resource development.
    As for Ms. Clarks record of environmental stewardship, I think Ms.Clark’s words and actions speak for themselves:
    Regarding the proposed controversial Prosperity Mining development in northern BC, which did not receive federal environmental approval, Ms. Clark stated:
    “I think the Prosperity Mine needs to move ahead, not just for the thousands of jobs that would be created over the years in the Williams Lake area, but as a signal to investors across the world that British Columbia is open for investment, and if you want to tell people not to come the Prosperity Mine is a pretty big signpost telling them we don’t really want investment here. We have to change that,”
    “Sierra Club BC is dismayed by BC Liberal leadership candidate Christy Clark’s statement that one of her top priorities is to reverse Ottawa’s decision to reject the proposed Fish Lake gold and copper mine near Williams Lake,” the release reads.
    “Ms. Clark was part of the BC Liberal government which gutted our provincial environmental assessment process a decade ago. Their jobs-at-any-cost approach led to provincial approval of a lake-destroying mine”, concludes Heyman, who admitted considering a run at the BC NDP leadership but decided against it.
    The federal government environmental panel did indeed soundly thrash the mine proposal that Clark and Falcon love.
    The mine, the federal panel wrote: “Would result in significant adverse environmental effects on fish and fish habitat, on navigation, on the current use of lands and resources for traditional purposes by First Nations and on cultural heritage, and on certain potential or established Aboriginal rights or title.”
    The Prosperity Mine “in combination with past, present and reasonably foreseeable future projects would result in a significant adverse cumulative effect on grizzly bears in the South Chilcotin region and on fish and fish habitat.”

    It seems hypocritical and selfish of Ms. Clark to want Resource development for British Columbia and wanting exclusive access for BC’s energy products to Asia, seemingly at the expense of Alberta and Saskatchewan’s own energy development wanting access to these same markets.
    It would appear Ms. Clark is in support of unfair trade practices by placing unreasonable demands and barriers upon Alberta to export it products to Asia. This is accomplished by Ms. Clark’s strategy of hiding behind a curtain of environmental stewardship and social justice. Albertans are not fooled by this ploy, neither should Canadians or British Columbians.
    Joe Thibault
    Calgary, Alberta

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