The Northern Gateway brief: unhappy political options and geopolitical assessment
The National Energy Program of 1980 – when a Liberal federal government forced Alberta to sell oil to central Canada at below market prices – is political lore in Alberta. It turned the province forever against the Liberals and become a major source of “western” grievance. Of course, British Columbians feel like they now are about to become the victims of a new National Energy policy, one that sees the export of Alberta’s oil subsidized by British Columbia, which will have to assume billions of dollars in environmental and economic risk while seeing relatively little economic benefit.
Given BC is about to acquire six new seats in the House of Commons, holding on to, and acquiring more of those seats is critical to Conservative’s efforts to maintain a majority. The concerns of British Columbians will not be taken lightly – one can imagine the discomfort of the BC caucus in the party. Indeed this August 2012 Abacus poll showed that “In BC… 41% of 2011 Conservative Party voters oppose the pipeline with 21% strongly opposed.”
This leaves the Federal Government in an exceedingly sticky position on multiple fronts. The government has, of course, been pushing Canadian oil across the Pacific, which has helped spur significant Asian investment in the oil sands; witness the $15.1-billion acquisition of Calgary-based Nexen Inc. by China National Offshore Oil Corporation (CNOOC) and $5.2-billion acquisition of Calgary-based Progress Energy Resources by Malaysia’s Petronas.
If the pipeline were now not to be built, the promises of access to Alberta oil across the Pacific would be greatly damaged; so too, I suspect, would be the access to foreign capital needed to develop the capital-intensive oil sands.
On the other hand, if the pipeline were to be built, the Conservatives would be significantly exposed to suffering major, and possible majority-ending losses, in British Columbia.
This means that all the current scenarios are not great for the government.
The first scenario assumes that the National Energy Board (NEB) - which is conducting a review of the pipeline (including an environmental review) – approves the project and that it gets built. This is a disaster. The risks of a new “National Energy Program” this time directed against British Columbia by Conservatives could wipe the party off the political map in BC much as it did the Liberals in Alberta after the 80s.
The second assumes the NEB approves it – however, the pipeline is bogged down for at least 10 years in litigation from First Nations and environmental groups (if not much, much longer). What makes this so friendly is that it may allow the government to appear to support the pipeline while nothing actually happens. It may thus be able to preserve its political base in BC since the facts on the ground don’t change much and can continue to cast its favourite enemies – environmentalists and, less publicly spoken, First Nations – as the enemies of progress. Ranting against the former could serve as a useful rallying cry for fundraising – much like the gun registry – for many years.
That said, foreign investment would probably suffer – how much I don’t know – but it is hard to imagine much Asian money flowing into the oil sands at this point.
Of course, if the NEB doesn’t approve the project, things get worse. Much worse. Now the only way for things to move forward is for the cabinet to overrule or find a workaround of the NEB’s decision (assuming this is possible).
If the Government doesn’t overrule the NEB, it is essentially telling Asia that its promises and commitments to exporting oil are empty. Do not expect a “Team Canada” trade mission to be welcome in the capitals of Malaysia or Beijing any time soon. Worse, expect Alberta – particularly Conservatives in Alberta – to be livid. The implications for the party’s internal dynamics could be significant.