Andrew Scheer gave the second of his policy keynote speeches yesterday, this one on his economic vision, and as could be expected, it was full of hyperbolic declarations about the size of the deficit (it’s tiny in comparison to our GDP), and the state of Canadian household finances (which have been growing). He promised that any new spending programmes would have to be paid for out of government “savings,” and in his pledge to balance the budget in two years, that would mean cuts. Of course, Conservative mouthpieces say this is easily enough achieved because they did it before (forgetting of course that the previous government had a habit of booking savings that were never going to be achieved for the sake of getting to a paper balance, like Shared Services Canada, or the Phoenix Pay System). The Liberals, incidentally, were quick to put out Bill Morneau to put a price tag on those cuts and warn that they would come out of families, and with the spectre of seeing what Doug Ford is doing to those families in Ontario, well, it’ll make things harder for Scheer.
Huh?
The whole *point* of economic indicators is to measure human welfare. https://t.co/hsA4QCPyJM
— Stephen Gordon (@stephenfgordon) May 17, 2019
The part that everyone talked about, however, was his grand vision of an “energy corridor” across the country where pipeline projects would magically cross the country with buy-in from Indigenous communities and everyone would be happy and prosperous, and we would have energy security and would never had to import oil from Saudi Arabia ever again. The problem with this fantasy picture, however, is largely economics. Even if Energy East were to get built, by some miracle, it would not have an economic case given that it wouldn’t be used for domestic oil in the eastern provinces as it would be far more expensive than the oil they’re importing. In fact, Energy East did not make it off the drawing board because there was no economic case – it wasn’t because there was opposition in Quebec (which has already achieved some kind of mythical status), but because there was no economic rationale for the company given that Keystone XL was back on the table. Scheer’s promise (other than the fantasy of it even happening) is that Alberta will either have to take a huge discount per barrel of oil, or oil prices in the eastern provinces start taking a major jump because they’re paying a lot more for it, and upgrade it from heavy petroleum and refine it (in refineries that would have to have been refitted, likely with yet more taxpayer subsidies). But since when should logic or basic economics be part of an “economic vision”? That would be silly.
The economics and geography here is simple – it's a lot further to St John than to the west coast, but the value of oil at tidewater will be about the same. Net back to Alberta, if our marginal barrels are moving to St John, we're getting paid less for them net of pipe tolls.
— Andrew Leach (@andrew_leach) May 16, 2019
Hey @AndrewScheer, you might be interested in a line from a historic Canadian political speech:
"While Canada is a net exporter of energy and is dealing
from a basic position of strength, the chink in our armour is our dependence on imported oil."Alan MacEachen, October 1980
— Andrew Leach (@andrew_leach) May 16, 2019
Chris Selley offers a critique of Scheer’s rhetoric, but finds it more astonishing that it’s the Liberals’ own self-inflicted damage that is putting Scheer in a position where he has a reasonable shot of winning.