Tuesday, November 22, 2011

An open reply to a letter from Joe Oliver on the Northern Gateway pipeline

The Hon. Joe Oliver
Minister of Natural Resources
Ottawa, Canada K1A 0E4

SJ: Enbridge pipeline proposal is not in Canada’s best interest

Dear Mr. Oliver,
Thank you for your detailed reply to my letter of July 19, 2011. I read your letter with interest and after giving serious consideration to your comments, I have come to the conclusion that the Enbridge Northern Gateway proposal would be a major mistake for Canada.
In my previous letter, I wrote that the profits and rewards associated with selling Alberta’s bitumen to Asia would only benefit the province and the multi-national corporate partners. You rightly objected to this statement by pointing out that there are benefits to the rest of Canada through royalties, equalization payments, etc. However, after considerable research and analysis I have concluded that while there are some benefits to the rest of Canada, a significantly disproportionate share of the benefits go to Alberta and the multi-national corporations. For example, Alberta collected 7.5 B$ from total oil and gas revenue in 2010. By comparison, the Net Profit from only 3 of the 10 major oil sands producing companies (Suncor, Imperial and Cenovus) totalled over 7.0 B$ in the same year. Economic benefit to the rest of Canada is a very small fraction of these totals.
In terms of employment, you indicated that direct and indirect employment from oil and gas production is estimated at 500,000 jobs. While this is significant, it must be put in context. Stats Canada indicates that there were approximately 17,000,000 jobs in Canada for 2010 and less than 5% of these jobs are connected to the oil and gas industry. Even in the province of Alberta, the oil and gas industry only provides 150,000 out of a total of 2,000,000 jobs (7%) and in British Columbia, this sector creates 35,000 out of 2,300,000 jobs (2%). In contrast, tourism and recreation in British Columbia creates more than 250,000 jobs and many of these jobs could be threatened by the proposed pipeline.
You also wrote of the positive balance of trade surplus that is related to oil and gas exports. While this is certainly true, it must also be noted that these same oil and gas exports are largely responsible for the high value of the Canadian dollar relative to the US currency. Unfortunately, our high value ”petro-dollar” causes considerable hardship for any segment of the economy that relies on export or tourism. This has recently been evident in the loss of 48,000 manufacturing jobs during October 2011 and over the period from 2006 to 2010, the manufacturing sector has lost more than 350,000 jobs (Stats Canada).
In terms of job creation, pipelines that are designed to export raw bitumen are not desirable for Canada. For example, former Alberta Premier Lougheed recently stated "I would prefer...we process the bitumen from the oilsands in Alberta and that would create a lot of jobs and job activity ... That would be a better thing to do than merely send the raw bitumen down the pipeline and they refine it in Texas that means thousands of new jobs in Texas. (CBC, 9/13/11). Lougheed’s statement has been confirmed by US House Speaker John Boehner who indicated that the delay of the keystone pipeline meant that "More than 20,000 new American jobs have just been sacrificed in the name of political expediency”. In addition to shipping jobs out of Canada, the Northern Gateway and Keystone pipelines ship bitumen at $64/barrel out of the country where it is refined and sold at more than $90/barrel (2010 average prices). This represents a major share of the oil sands value that should be benefitting Canadians.
In terms of National Energy Policy, these pipelines are not beneficial to Canada. Canada currently imports more than 55% of our oil requirements from Norway and the Middle East. As oil supplies continue to tighten, Eastern Canada’s oil supply is increasingly vulnerable and at the same time your government is focused on providing a secure oil supply for the US and China. Why is their energy security more important than our own?
The foolishness of this proposal is even more obvious when one considers that it requires 900 km of pipeline and 9000 km by oil tanker to move bitumen to China. Shipping oil from the Middle East to Halifax requires an additional 9500 km. By contrast, shipping bitumen from Edmonton to Southern Ontario would only require a pipeline of 2700 km which is less than the 3000 km required to ship the bitumen to Houston, Tx.
The Northern Gateway Pipeline would be harmful to Canada through decreasing Canada’s energy security. By comparison, refining the bitumen in Canada would create Canadian jobs and improve our economy through value-added industries. And as a bonus, it would also be much safer for the environment.

Keith Hirsche
1161 Chapman Rd.
Cobble Hill, BC
250 929 5586

cc: Prime Minister Harper
Jean Crowder
Elizabeth May
Alison Redford
Christy Clark
Denis Lebel
David Swann


Anonymous said...

Excellent and well thought out points. Clearly Mr. Oliver would do well to 'known thine enemy'. His patronizing criticism of anyone opposed to this pipeline makes me proud to be a 'former' Conservative. He has done nothing more than fan the flames of this issue and it's wonderful to see that we 'radicals' seem more capable of putting a thoughtful and well-informed response together than apparently do our government officials. Bravo!
I hope to see more of your blog in the future.

Anonymous said...

Well done. Your excellent argument clearly shows that opposition to this pipeline isn't "radical" it is, in fact, only reasonable. Although I am certain that Joe Oliver is already aware of that and only wished to preemptively discredit opposition to the pipeline with his comments.