While crude prices in Western Canada continue to take a beating (in part because there is a global supply glut in the market and there are questions about why oil prices got as high as they did recently given market conditions), there are other concerns about investors fleeing the country. Not all, mind you – there are still a number of big-ticket energy projects being signed in the country which defies this narrative that’s going on, but I have to pause on some of the overheated rhetoric being bandied about here, because we need to inject some perspective into the conversation.
Other heavy oils trade for a few dollars or so less than the global Brent price ($66).
Huge, huge, huge gap between prices fetched for Canadian oil vs. pretty much everyone else.— Josh Wingrove (@josh_wingrove) November 15, 2018
For one, the lack of infrastructure to tidewater is because there simply wasn’t an economic case for it until recently. It’s hard to complain that we don’t have it when there was no proper rationale for its existence. Same with refineries – it’s a low-margin exercise and refineries cost billions of dollars to build, and the economic case for building more of them has largely not been there. It’s not just because we have tough environmental regulations in Canada that these projects don’t exist – there weren’t the market conditions.
The other thing that really sets off my alarm bells is this pervasive talking point among oil industry boosters that Canada once built railways, so we should therefore be able to build pipelines. This kind of talk should be utterly galling to anyone who has a modicum of understanding of history in this country, because the railways were built by virtual slave labour from China, following the relocation of Indigenous tribes across the prairies due to starvation and inadequate government aid (while there is some debate over how deliberately starvation was used to force compliance). This is not the kind of thing you want to be touting when it comes to building pipelines, particularly if those opposing construction are other Indigenous communities. And as I’ve pointed out repeatedly, it’s not the high bar of environmental regulations that are killing projects – it’s the fact that successive governments and proponents have tried cutting corners to weasel out of their obligations, and that’s what hurts them, not the minimal additional work it would have taken to properly fulfil those obligations. I get that they’re looking for scapegoats during these trying times for the energy sector, and that nobody wants to look in the mirror, but honestly, trying to compare the railways to this current situation is borderline offensive to anyone who has a modicum of historical knowledge.