Pipelines: the common sense solution

Alberta’s provincial government has announced it will be curbing oil production to reduce the oil backlog that has resulted in a record price differential between Western Canada Select (WCS) oil and West Texas Intermediate (WTI) oil, which it is often compared to.

While the move has been met with a mixed reaction by those in the industry, it’s being supported by the opposition United Conservative Party, a little surprising considering the free market stance of the Tories and other parties like them.

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Here in Saskatchewan, the provincial government has decided it won’t be curbing production on oil, even though it faces many of the same problems as Alberta.

The price differential issue is one that we’ve heard about intermittently for years. Detractors of Prime Minister Justin Trudeau love to point the finger of blame solely at him – and he deserves a lot of criticism for his waffling on the energy sector – but he’s not the only one to criticize.

Let’s remember that there was a lot of talk about the price differential issue and the oil backlog for pipelines in 2013, when Stephen Harper was the prime minister. And while the oil price was much higher back then, there was a pretty steep difference between WCS and its WTI counterpart.

But back in 2013, the greater discussion was on the number of job vacancies in the patch, and the lack of housing opportunities for those in communities affected by the oil boom.

Successive governments should be sharing the blame on the differential. It’s not just the Liberals’ fault that we don’t have the pipeline infrastructure to accommodate our oil.

The Liberals should be criticized for blocking the Northern Gateway Pipeline. They definitely should be criticized for the legislation they introduced that wound up killing the Energy East Pipeline.

And you could call the handling of the Trans Mountain Pipeline expansion a comedy of errors, but we don’t see the humour in spending billions of dollars to purchase a pipeline, only to have it blocked over an alleged lack of consultation.

But we didn’t see pipelines getting built during the years of the Harper Conservatives, either. And they were in power for nearly a decade – enough time to get things built.

This oil price differential has been another blow to an industry that can’t afford additional obstacles. Oil companies survived the oil price crash of 2014 to 2016, when the price of oil plunged to levels not seen in many years. Workers took pay cuts or lost their jobs. Drilling activity was very low.

Then, when the outlook starts to improve and the WTI oil price rebounded to the point where companies can start drilling again and they can make a tidy profit, the producers in Western Canada can’t capitalize on it because they’re getting a lower price due to governments’ failures to provide them an avenue to get the oil to market.

(Note: trains are not the answer).

We need pipelines. The Enbridge Line 3 replacement isn’t going to be nearly enough. Get the pipeline infrastructure built, get the oil to tidewater and ship it off to the necessary markets.

Allow our energy companies to get a competitive price. Allow them to hire people for these well-paying jobs, so they can spend money at local businesses. 

Take the money from the oil royalties and use it to build hospitals and healthcare facilities, schools, water projects and roads, and to invest in social programs.

When that happens, Canada wins. 


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