|SocialismToday Socialist Party magazine|
Issue 220 July/August 2018
Trudeau buys into big oil
Canadian prime minister Justin Trudeau has capitulated to blackmail from Kinder Morgan, the giant energy infrastructure company. His Liberal government will buy KM’s existing pipeline that runs from Alberta’s tar sands to the port of Vancouver for $4.5 billion. It is now Trudeau’s and it will be up to his government to try to force through the proposed expansion of the pipeline against mass resistance.
This decision to spend taxpayer money on a dodgy project is in response to KM’s threat on 8 April that it was suspending all "non-essential spending" on expanding the pipeline because of "extraordinary political risks". It demanded that the federal government provide guaranteed "clarity on the path forward" by 31 May or it might cancel the project.
The purchase removes all risk from Kinder Morgan, a Texas-based company that emerged from the wreckage of Enron, and transfers it to Canadians. As the Royal Bank of Canada valued the existing pipeline at $2.3 billion, KM shareholders are laughing all the way to the bank.
However, it does not resolve any of the obstacles to tripling the pipeline’s capacity. The mass resistance of First Nations and people in British Columbia (BC) remains. Within hours of the announcement of the purchase, thousands demonstrated in Vancouver.
The BC government is seeking to block in court any increase in diluted bitumen shipments through BC waters, on safety concerns. More significantly, there are outstanding court cases from First Nations. The Canadian government has a legal duty to consult with First Nations over the pipeline, but many state they were not consulted in the flawed process that approved the pipeline under the previous Conservative Party government led by Stephen Harper.
The Tsleil-Waututh and Squamish territories are at the pipeline’s terminal, and almost half its route passes through Secwepemc territory. They plan to block construction. In addition, is the resistance of the people, especially in Vancouver. Over 200, including two MPs, have already been arrested for standing peacefully outside KM’s gates, charged with contempt of court. Many thousands more are committed to doing so. The Alberta government has passed legislation allowing it to cut off the supply of oil and gas to BC, which is also being challenged in court by the BC government. These cases will drag on for months or more, and the resistance will remain.
The battle will intensify before it is resolved. Rick Orman, a former Alberta cabinet member, has stated that the army will be needed to build the pipeline. Others have talked of using the War Measures Act. With this approach, the allegedly progressive prime minister could be heading for a bitter conflict similar to the one that took place at Standing Rock, 2016-17, against the Dakota Access Pipeline.
Trudeau made a big splash at the Paris climate change conference in 2015, promising to reduce carbon dioxide releases. Already, the tar sands are Canada’s biggest source of CO2 emissions, and the pipeline would accelerate climate change already wreaking havoc in Canada and around the world. In addition, pipelines leak all the time – KM’s BC pipeline leaked two days before the announcement of the government’s buyout! The proposed route will cross 500 rivers and streams, and a leak would threaten water supplies, fishing and wildlife.
A leak in Vancouver harbour would be a disaster. The 1989 Exxon Valdez spill of 260,000 barrels of oil contaminated 2,000 kilometres of coastline. The incomplete cleanup cost over $7.7 billion in today’s money. The tankers that the proposed pipeline would fill are twice as big as the Exxon Valdez and diluted bitumen is far harder to clean up than crude oil. Yet Canadian law only requires a pipeline company to have $1 billion to cover spill liabilities. A tanker owner’s liability is also limited, to just $1.36 billion.
On top of the cost of cleanup is the impact on jobs. A spill in the harbour would cost thousands of jobs in fishing, tourism, recreation, transportation in the port and on the railways, and other sectors. The Conversations for Responsible Economic Development organisation based in Vancouver estimates that 200,000 jobs in BC are at risk from a major oil spill.
Given all that, why does anyone want to build this pipeline? Trudeau claims it is in the ‘national interest’. He justifies this with talk of 15,000 jobs. There is no basis for the claim. There will be short-term construction jobs, probably 2,500 for two years. Once completed, however, there will be only 90 full-time jobs, 50 in BC and 40 in Alberta, according to Kinder Morgan’s own figures. Trudeau really means the interests of the oil industry. It is the total opposite of his election pledges to respect First Nations and protect the environment.
It is also claimed that the pipeline will result in higher prices for Alberta’s bitumen, which sells in the US for less than normal crude. But the differential is due to the higher cost of refining bitumen and of moving it to the refineries. Trudeau’s pipeline will do nothing about either of these. As the claimed target market is east Asia, there would be additional costs of shipping it across the Pacific Ocean.
The economic foundation of Trudeau’s pipeline has been further weakened by the approval of two other pipelines from the tar sands: Keystone XL to the Gulf of Mexico and Enbridge’s Line 3 to Lake Superior. No doubt this was a factor in KM selling it off. It is a myth that the pipeline to Vancouver will bring back the boom to Alberta’s oil industry. The tar sands industry is shedding thousands of jobs as technology replaces workers. Suncor, one of the big tar sands companies, is cutting 400 jobs, replacing truck drivers with automated trucks.
Unifor, the largest trade union in the oil sands, opposes the KM pipeline because of the risks to BC’s fishing industry from a spill, fear of job losses, and the export of jobs. The refinery in Vancouver relies on regular crude oil from Alberta, and when the pipeline switches to dilute bitumen it will be unable to refine it. The Alberta Federation of Labour was also critical of the pipeline as it would export raw bitumen to refineries and factories in other countries, thus exporting jobs and most of the value added in processing. The only jobs it might create are firefighters, emergency responders and dyke builders responding to climate change!
Tragically, Alberta’s New Democratic government has drunk the tar sand industry’s propaganda kool-aid. When it won the 2015 election, it promised to diversify the economy: "We’ll reduce our province’s over-dependence on raw bitumen exports and create more jobs with more upgrading and processing here, rather than in Texas". The vast majority of Albertans, a stunning 79%, think Alberta is too dependent on oil and gas. Yet the government is now acting like paid KM representatives, offering $2 billion to help build Trudeau’s pipeline.
Québec’s politicians, ever sensitive to defending Québec’s rights within Canada, are unhappy with Trudeau’s actions. In April, the Québec premier warned the federal government to be "very careful", viewing its desire to overrule BC’s concerns as "not a good sign for federalism". Other politicians have expressed stronger opposition.
Trudeau’s image on the environment and First Nations is ruined. But as Canada’s elite depend on extracting and exporting raw materials, he has to show global capitalism that Canada is open for exploitation. Trudeau, as with the previous Liberal governments, remains loyal to big business.
His purchase of the pipeline has raised the stakes. He will not be moved by petitions, postcards, demonstrations or mass arrests. As an oil spill in the harbour would threaten thousands of jobs and close the port for weeks, Socialist Alternative campaigns for a one-day shutdown of Vancouver to hit Trudeau’s rich backers. This would be a big step to stop the pipeline.
Canada’s fossil fuel industry receives $3 billion of annual subsidies, the government is spending $4.5 billion to buy the existing pipeline, and construction costs for the expansion are at least $7.4 billion. If this $15 billion was used to replace fossil fuels with clean energy and upgrade buildings there would be far more good jobs, while respecting Indigenous peoples’ rights and protecting the environment.
Socialist Alternative (CWI Canada)