Feature

Pipeline Politics and Canada's Petro-State Reality

Without a public conversation, resource wealth will continue to go into the pockets of foreign companies, leaving a major environmental and economic quagmire to future generations of Canadians.

By Dave Heidebrecht
Published December 04, 2012

Andrew Nikiforuk is no stranger to pipeline politics. The Calgary-based journalist, one of Canada's most outspoken critics of Alberta's oil sands, fears that too many Canadians are strangers to the reality of fast-paced resource development that is reshaping our country's social, political, and economic systems.

Andrew Nikiforuk speaking at this year's Spirit of Red Hill Valley annual lecture
Andrew Nikiforuk speaking at this year's Spirit of Red Hill Valley annual lecture

In the process, Nikiforuk argues that Canada has become a petro state, with our economic and social structures relying far too heavily on unstable and unsustainable oil revenues. Concerned that Canadians have yet to have a national conversation on our energy resources, Nikiforuk believes that we should all know more about the long-term consequences that come alongside a willfully blind reliance on an incredibly unstable market resource such as oil.

I want to give you a sense of how profoundly this project has changed our country ... it is a story that as Canadians, we should be familiar with."

Introducing this idea at a lecture in Hamilton, Ontario earlier last week, Nikoforuk started by telling the audience, "I want to give you a sense of how profoundly this project has changed our country...it is a story that as Canadians, we should be familiar with."

Speaking to a crowd of about 200 people, Nikiforuk delivered the annual Spirit of the Red Hill Valley Lecture, an event organized by the Friends of the Red Hill Valley and Hamilton 350. Meant to serve as a reminder of the local struggle to stop the Red Hill Valley Parkway, the lecture series brings in well-respected speakers on current environmental issues.

Canada-Wide and Local

Nikiforuk couldn't have been a better choice in this respect, as the reach of the oil sands and pipeline politics spreads from coast to coast. While national attention in this respect has been focused on the proposed Enbridge Northern Gateway pipeline project, which would send oil to China via Kitimat in BC, and TransCanada's Keystone XL pipeline, which would send more oil to our southern neighbours, pipeline politics is also having an impact right here in Ontario.

As part of a larger strategy to find a way to get oil to foreign markets, and facing great opposition to the Northern Gateway pipeline that would send oil west to the Pacific, Enbridge is attempting to gain approval to reverse its Line 9 pipeline, a portion of which runs through Westover, a community on the outskirts of the Hamilton city limits.

The entire line runs from Montreal to Sarnia, and is currently used to deliver foreign oil into Eastern Canada. Proposing to reverse the flow of Line 9 so that oil could be delivered from Sarnia to Montreal, Enbridge is now facing opposition from critics who believe this is simply a ploy to export the oil via the Eastern Seaboard.

While Enbridge maintains that the line would be used to transport light crude to Eastern Canadian markets, Nikiforuk and others believe that the end game will result in heavier crude being shipped from Montreal to Portland, Maine, and then overseas.

Given the criticism that Enbridge has faced for its lackluster track record (including a 2010 spill in nearby Michigan) on honesty and accountability, and it is difficult to take any statements about intentions at face value.

Giving Away Our Resources?

Commenting on this potential result, Nikiforuk expressed concern that regardless of the route taken, the overall goal of industry and the federal government is to sell our resources with no value-added (i.e. raw and unprocessed) to foreign markets at one of the cheapest rates in the world.

On this point, Nikiforuk disputed the notion that Canada is an energy superpower, but argued rather that we are more like an energy supermarket, selling off our natural resources without considering the long-term implications of our actions.

Were more Canadians to realize the negative impacts of living in a petro state, Nikiforuk argued, perhaps more of us would demand a national debate on the future health of our economy, environment, and society as a whole.

Andrew Nikiforuk delivers his lecture titled 'Bitumen, Pipelines, and the Petro State' in Hamilton on November 28, 2012
Andrew Nikiforuk delivers his lecture titled "Bitumen, Pipelines, and the Petro State" in Hamilton on November 28, 2012

Why Don't We Care?

So why don't we care about an issue if it is so important? Nikiforuk points to the lower tax rates that petro state governments (such as our own) implement.

Lower taxes make the general population feel more comfortable, and thus less likely to care about the actions of government given that less money from our own pockets is going to the public coffers.

As Nikiforuk repeated a number of times over the course of his presentation, "If you're not being taxed, you're not being represented."

If you're not being taxed, you're not being represented.

This isn't as much of a problem during the high times, as corporate profits tend to support the social programs that lose funding when tax revenues drop (as many who currently work in Canada's non-profit sector will attest).

The problem can and will come to a head, however, when the fast money and high times run dry and corporations no longer have the money to support community programs (programs that historically have been publicly funded).

Given that an increasing number of investors in Canada's energy sector are foreign-owned, community allegiances may be short-lived when investors pack up and go back home.

Who's Profiting?

Add to this Nikiforuk's concern with the high investment of Chinese state-owned energy companies with poor labour and transparency records, and one starts to see a picture of the "all eggs in one basket" approach to that our leaders are taking with our country's economic future.

With 30 percent of our current national revenue coming from the export of bitumen, Nikiforuk argues that our economy is far too reliant on oil revenues. At the same time, our federal government's omnibus budget Bill C-38 is cutting numerous environmental regulations and other checks and balances that might question this high-paced, fast-money approach to economic development.

For those who argue that Canada - or the foreign corporations that own the majority of oil sands projects - must extract and sell our oil as fast as possible to reap the collective economic benefits, Nikiforuk points to the money, or lack thereof.

Yes, a great number of Canadians who are engaged in the industry are reaping the short-term monetary benefits. However, as a nation we have little to no savings to show for the fire sale of our valuable natural resources.

The savings put aside by industry into Alberta's Environmental Protection Security Fund - just over $1.3 billion as of March 2012 - don't come close to the estimated $10-$20 billion for which taxpayers will be liable to properly reclaim the land that the oil sands have disturbed.

A Moral Failure

Reflecting upon the staggering bill that our children and grandchildren will be faced with in decades to come (not to mention the numerous other economic, social, and environmental implications), Nikiforuk noted, "If we do not take a moral leadership position on this issue, then what will our children think of us?"

Contrast this reality with that of Norway, where responsible slow and steady oil extraction included the creation of a public oil fund in 1990, which is now the world's largest sovereign fund, currently sitting at $650 billion, and it is hard not to agree with Nikiforuk that we need a national conversation. More importantly, we need it soon.

If we do not take a moral leadership position on this issue, then what will our children think of us?

Referencing an Iraqi-Norwegian scientist's recommendation to Norway's government years ago to "go slow, save the money", Nikiforuk ended his lecture with a call for a Canada-wide dialogue on the pace and scale of the oil sands, an energy project that will continue to influence and shape our nation for decades to come.

At present, this conversation has taken place in communities facing immediate pressure to bow to pipelines at the promise of incredible economic benefits. Many of those communities, however, realize that despite potential short-term gains, there is much more at stake. To appreciate what is at stake, an open and frank discussion is needed.

Time to Start Talking

Regardless of political stripe, we would all be better off to at least bring this topic to the table and discuss our shared future openly, or in the blink of an eye we'll be living in a country we no longer recognize.

Without a public conversation of this nature, resource wealth will continue to go into the pockets of foreign companies, leaving a major environmental and economic quagmire to future generations of Canadians. As a young Canadian who plans to be around for decades to come, this conversation can't come soon enough.


Andrew Nikiforuk is an award-winning Canadian journalist and one of the most outspoken voices in Canada on issues surrounding energy policy and Canadian politics. His latest book on these issues is titled The Energy of Slaves. He is a frequent contributor to BC's online newspaper, The Tyee.


This article was first published on Dave Heidebrecht's website.

Dave Heidebrecht is the Manager of McMaster University’s Office of Community Engagement.

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By Bison (anonymous) | Posted December 04, 2012 at 10:04:36

Work cut out...

"Mark Carney strode in front of the most powerful members of Canada’s energy industry with a message that was sure to please: the Bank of Canada has done the math, and oil companies are not setting the country on a course of economic destruction."

http://www.theglobeandmail.com/report-on-business/economy/high-oil-prices-benefit-canada-carney-says/article4526550/

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By Pxtl (registered) - website | Posted December 04, 2012 at 13:54:57 in reply to Comment 83429

Carney's vision for Canada is a petro-state. A country that exports nothing but its own landmass, where all the industry and commercial activity unrelated to the oil industry is superfluous and expendable because the oil industry creates more jobs and more revenue.

I understand the rationale. More money for Canadians and more worth to that money means higher quality-of-life for Canadians and more cash for the government to use to provide services. So I see where he's coming from.

But that's still not the country I want Canada to be. A country should be noted by what it produces, not what it merely extracts.

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By viennacafe (registered) | Posted December 04, 2012 at 20:05:08 in reply to Comment 83443

I don't know if you were at the talk, but the speaker indicated quite the opposite. Petro-states tend to be low tax regimes which cut services and become dependent on the revenues of the extracted resource. Or, as the speaker put it several times for emphasis, "no representation without taxation."

As well, while some jobs are created, more jobs are lost creating a more unequal society which is referenced as the Dutch Disease. And in Canada we now see the Harper government loosening rules around foreign temporary workers to further drive down the wages and working conditions of Canadians including those in the tar sands.

http://www.afl.org/index.php?option=com_...

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By Bison (anonymous) | Posted December 04, 2012 at 15:05:43 in reply to Comment 83443

Agreed on national aspirations. Although our half-trillion-dollar trade relationship with the US and Mexico and growing partnerships with Russia, Brazil et al will obviously leave us less than virginal.

http://www.reuters.com/article/2012/11/12/us-iea-oil-report-idUSBRE8AB0IQ20121112

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By Ryan (registered) - website | Posted December 04, 2012 at 14:25:11 in reply to Comment 83443

Notwithstanding Carney's optimism, the OECD believes Canada does have Dutch Disease due to its policy emphasis on petroleum extraction and exportation rather than value-add manufacturing.

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By Bison (anonymous) | Posted December 05, 2012 at 08:42:08

For the last 40 years, prosperity, wealth, and “progress” have rested, at least in part, on a grotesque process of auto-cannibalism—it has also been called “dis-accumulation” by David Harvey—of a society that is devouring its own.

Traditional forms of primitive accumulation still exist abroad. Hundreds of millions of former peasants, fisherman, craftspeople, scavengers, herdsmen, tradesmen, ranchers, and peddlers provide the labor power and cheap products that buoy the bottom lines of global manufacturing and retail corporations, as well as banks and agribusinesses. But here in “the homeland,” the very profitability and prosperity of privileged sectors of the economy, especially the bloated financial arena, continue to depend on slicing, dicing, and stripping away what was built up over generations.

Once again a new world has been born. This time, it depends on liquidating the assets of the old one or shipping them abroad to reward speculation in “fictitious capital.” Rates of U.S. investment in new plants, technology, and research and development began declining during the 1970s, a fall-off that only accelerated in the gilded 1980s. Manufacturing, which accounted for nearly 30% of the economy after the Second World War, had dropped to just over 10% by 2011. Since the turn of the millennium alone, 3.5 million more manufacturing jobs have vanished and 42,000 manufacturing plants were shuttered.

Nor are we simply witnessing the passing away of relics of the nineteenth century. Today, only one American company is among the top ten in the solar power industry and the U.S. accounts for a mere 5.6 percent of world production of photovoltaic cells. Only GE is among the top ten companies in wind energy. In 2007, a mere 8 percent of all new semi-conductor plants under construction globally were located in the U.S. Of the 1.2 billion cell phones sold in 2009, none were made in the U.S. The share of semi-conductors, steel, cars, and machine tools made in America has declined precipitously just in the last decade. Much high-end engineering design and R&D work has been offshored. Now, there are more people dealing cards in casinos than running lathes, and almost three times as many security guards as machinists.

http://www.guernicamag.com/daily/steve-fraser-the-archeology-of-decline

At the risk of additional downvotes, yet another example of how painfully convoluted and short-sighted economic policy has become in recent generations.

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