In our Province of British Columbia (BC), Canada, the resource industries are overwhelming the citizens with a series of mega-projects with huge environmental and economic considerations.
Whether you support the oil industry, the Kinder Morgan and Enbridge pipelines (from the oilsands to our coast for export – see previous blog, Pipelines), the LNG (liquefied natural gas) projects or the Site C dam (another hydro Dam on the Peace river – Northern BC) – or not, you must be concerned about the lack of clarity regarding the economics of these mega projects.
If we continue to fund these projects either by providing $ billions in subsidies to the oil, pipelines and LNG industries, as we currently do, or pay the direct capital cost of $8+ billion for Site C, then we MUST have a sound economic business case behind them and an accurate and transparent economic account available to the public for scrutiny. We need these assessments to determine the costs and impacts so Canadians and BC residents in particular can determine what we are getting into.
Instead, Enbridge bombards us with insulting advertisements and our Provincial government is making grandiose political statements that provide no factual information or third-party, unbiased, assessments about the costs of these projects. Premier Clark completely exaggerated the LNG potential during the election campaign last year by promising $trillions in royalties and taxes and paying off the Provincial debt – with absolutely no substance to the statements. It is amazing that the BC electorate falls for such BS. As I write this the LNG backers (Petronas) is indicating that the economics are dubious and are backing down. Even if you support the oil, gas, pipelines and Site C are you wondering about the economics and the danger posed by these costs?
It does not add up. The following are a few, of many disturbing assessments, that are emerging from experts in this field.
Here are some quick assessments:
- Contrary to what Canadians are led to believe, the oilsands contribute less than 2% to Canada’s GDP and only 0.4 % to other provincial GDPs outside of Alberta. There is no benefit to BC with the Enbridge pipeline project – but huge environmental risks. There are many more sectors contributing to the GDP better than oil. Ref: http://www.vancouverobserver.com/blogs/climatesnapshot/tar-secret-2-what-percentage-canadas-gdp-comes-tar-sands
- For comparison, the beer industry alone contributes 1% to Canada’s GDP.Ref.http://www.conferenceboard.ca/e-library/abstract.aspx?did=5847
- A particularly damning assessment of Kinder Morgan Trans Mountain pipeline (TMX) from a very recent publication: Economic Costs and Benefits of the Trans Mountain Expansion Project, SFU. Nov. 10, 2014. Ref. http://www.sfu.ca/content/dam/sfu/mpp/HomepageFeatureArticles/Economic%20Costs%20and%20Benefits%20of%20the%20Trans%20Mountain%20Expansion%20Project%20(TMX)%20for%20BC%20and%20Metro%20Vancouver_20141110.pdf
In light of the findings of the SFU-TGG Report regarding the evaluation of the costs and benefits of TMX, we conclude that the pipeline project is not in the economic or public interest of the citizens of BC and, in particular, the citizens of Metro Vancouver. Moreover, TMX completely fails to satisfy BC’s fifth condition for the consideration of construction and operation of heavy-oil pipelines within its borders. This Report therefore strongly recommends that the citizens and decision-makers of BC and Metro Vancouver reject this pipeline, which is neither in the economic nor public interest of BC and Metro Vancouver”.
Now in order to maintain objectivity, there is a counter assessment that stated that the SFU’s report used faulty methodology to arrive at this conclusion. http://beaconnews.ca/blog/2014/11/trans-mountain-benefit-sfu/
But this is my point – how can the tax payers of this Province properly assess and understand the enormous economic risk to these projects when there are conflicting reports. It draws the economics into question and a deep concern is festering.
Nevertheless, it is apparent that Kinder Morgan has deliberately over estimated the economic benefits of the Trans Mountain pipeline project. This is not surprising as they must inflate their self-importance to create a public myth to gain support. The review process is suppressing the truth. Ref: http://www.theglobeandmail.com/news/british-columbia/economists-question-projected-value-of-trans-mountains-pipeline/article21528943/
Furthermore, economists and other interveners have been challenging and questioning the economic assertions and the review process but Kinder Morgan and the National Energy Board continue to stymie the process.
Ref: Kinder Morgan Hearings a Farce – http://www.theglobeandmail.com/news/british-columbia/kinder-morgan-pipeline-hearings-a-farce-former-bc-hydro-chief-says/article21433093/
The same is becoming apparent with the LNG (liquefied natural gas) proposals. From grand-standing election statements from our Premier Clark, that touted 5 LNG plants and all the cash you could imagine; attaining three plants is now far-fetched and it is most likely that only one plant might be built, if any at all.
Due to falling gas prices, increased production and competition and LNG plants in other countries now coming on stream, the LNG project is not the cash-cow we were promised. And Site C is expected to supply electricity for the LNG plant(s), so why would we build it if the fate of LNG is in doubt? BC residents will be left holding the bag on an 8 billion dollar white elephant and boondoggle with Site C.
It is also increasingly worrisome that these projects simply don’t add up against the stated benefits to Canadians and BC residents. The risk / benefit ratio is very good for these industries, especially for the pipelines, – they get the vast proportion of the benefit / we take the risk.
The point is we don’t know what the economic truth is and the mistrust is growing and for good reason – and that is just on the economics notwithstanding the environmental risks as well.
I think I will have a beer now and support our local economy and GDP.