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Kenney’s threat to ‘turn off the taps’ to B.C. ‘doesn’t make any business sense:’ experts

Category: Political News,Politics

Economists and analysts are questioning United Conservative Party (UCP) Leader and Premier-designate Jason Kenney’s pledge to “turn off the taps” of gasoline to B.C.

At a campaign rally in Edmonton on the last Friday before the province’s election, Kenney renewed his promise to “turn off the taps” of gasoline “within an hour” of being sworn in as Alberta premier in response to previous promises made by Vancouver Mayor Kennedy Stewart to achieve a carbon-free Vancouver by 2040.

READ MORE: Jason Kenney promises to make Vancouver carbon-free in 2020 — by turning off the gas taps

“The NDP mayor of Vancouver said he wants a carbon-free Vancouver by 2040,” Kenney told the crowd, referring to Stewart’s previous role as NDP MP for Burnaby South. “Well, if the B.C. New Democrats continue to block our energy, we’ll happily give them a carbon-free Vancouver by 2020.”

British Columbia’s current leadership has consistently opposed the Trans Mountain pipeline. The federal government decided to buy the pipeline last year in an attempt to push the project through. The move has faced backlash in B.C.

Experts are skeptical of the feasibility of this plan, and fear even higher gas prices are on the horizon should Kenney win the election and follow through.

“I think a lot of what Mr. Kenney’s saying is grandstanding,” said economist Robyn Allan. “There’s a significant amount of revenue involved for Alberta’s oil producers when you’re sending 300,000 barrels a day of crude product and refined product.”

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Allan estimates that the federal government, as the owners of the Trans Mountain pipeline that facilitates the transportation of oil between Edmonton and Vancouver, earns roughly $800,000 a day in tolls for use of the pipeline.

READ MORE: Feds grossed $70M in first few months of Trans Mountain pipeline ownership

“I think the federal government would have a lot to say about almost a million dollars a day in revenue being shut off for the Trans Mountain pipeline that they’re trying to suggest to the Canadian public was a good idea for the public to buy,” said Allan.

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British Columbia, she explained, can likely seek out other parties to fulfil its oil needs. However, it’s much more difficult for Alberta to find new markets for its exports. B.C. needs Alberta less than Alberta needs B.C., which means that Kenney’s plan may ultimately backfire, Allan concludes.

“Alberta probably depends more on B.C. as a market for its refined product and its crude oil than B.C. is going to depend on Alberta for those products, because B.C. has alternative ways of meeting its crude and refined product needs,” Allan said.

“It doesn’t make any business or market sense. And, in that respect, I doubt very much that it will ever happen.”

Dan McTeague, senior petroleum analyst for gasbuddy.com and former member of parliament, agrees with Allan’s sentiments and is concerned that additional pressure on the oil and gas industry could further inflame prices, which are reaching historic highs.

WATCH: Metro Vancouver gas prices break another record

“Vancouver will be at $1.71 per litre (Wednesday). All-time high, historic high, not just for Vancouver, or for B.C., not just for Canada,” he said. “It’s the highest price ever paid by any major city in North America, period.”

“So, it wouldn’t take much to create further chaos in terms of markets and in terms of prices. That’s because the Trans Mountain pipeline is literally the aortic artery of energy for Vancouver and the Lower Mainland,” McTeague said.

READ MORE: Alberta election: Here’s what the rest of Canada should know

Kenney’s threat — if acted upon — probably won’t come into effect until May at the earliest, McTeague predicts. Between May and September is a period of sustained, high demand for oil and gas companies, he said, and a lack of supply during the busiest period of the year could also contribute to rising prices.

“May is a critical month. You want to make sure you have all your ducks lined up, get your gas inventories up because demand goes through the roof in the summer. The summer season is known as Memorial Day long weekend, all the way until at least Labour Day.”

He stressed that more than Vancouver will be impacted if the Trans Mountain pipeline ceases to carry oil products to Vancouver. The pipeline also supplies the Kamloops terminal and much of the lower B.C Interior.

McTeague suspects that B.C. and Alberta leaders will soon need to negotiate a solution to their differences that doesn’t involve cutting off B.C.’s oil and gas supply.

“My sense is that either the two sides are going to have to sit down and negotiate something that resolves this problem once and for all because continuing to block pipelines in this country is leading to an unnecessary showdown,” he said.

If they can’t reach a compromise, he worries that the crisis of affordability in Vancouver could accelerate.

“We’re at $1.71 per litre. Let that sink in for a moment,” McTeague said.

“If Vancouver doesn’t think the Trans Mountain pipeline is important to its economic future, then it only has to recognize that its community is in a region which is already hard hit with high prices.

“It’s making a bad situation that much worse.”

© 2019 Global News, a division of Corus Entertainment Inc.


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