Gasoline prices as high as $2 per litre in British Columbia could be part of a wide range of consequences felt across Canada if the Alberta government makes use of legislation to limit the flow of key commodities from the province, predicts a leading petroleum industry analyst.
Dan McTeague of the online tech company GasBuddy warns such a move by Rachel Notley’s NDP government could drag down the loonie and price of oil, spook foreign investors and jeopardize thousands of jobs.
The Alberta government recently introduced legislation that would allow for the restriction of oil, gasoline and natural gas leaving that province. Violators would face fines of up to $1 million a day for individuals and $10 million a day for corporations.
that his province will also introduce legislation to restrict oil exports to B.C.
“If fuel tanks in British Columbia start to run dry because Alberta has turned the taps off, it won’t be Saskatchewan filling them up,†he wrote.
The legislation is Alberta’s latest salvo in the battle over the $7.4 billion expansion of the Trans Mountain pipeline stretching from Edmonton to Burnaby, B.C. In 2016, Ottawa determined the project to be in the nation’s interest.
The B.C. government has raised safety concerns, primarily about the increase in tanker traffic in its coastal waters as more oil is shipped to foreign markets. The province has asked the courts to determine who has jurisdiction over the pipeline within the province.
Houston-based Kinder Morgan has put the project on financial life support, suspending all non-essential funding, until the federal government sufficiently reassures investors.
Prime Minister Justin Trudeau met with Notley and B.C. Premier John Horgan on Sunday. He said the federal government will hold talks with Kinder Morgan to ensure the project’s completion.
Notley has said the legislation is not meant to punish B.C. McTeague agrees that the knock-on effects could be felt far beyond that province’s borders.
“We could see a further decline in oil’s value. Given it is our number one export, that means the Canadian dollar would take a hit. Most of our fuel is based on and priced in U.S. dollars,†he told Â鶹´«Ã½ Channel on Tuesday. “The Canadian dollar cut to less value for oil means higher prices for all Canadians.â€
McTeague warns the failure of another yet pipeline project would be seen as a warning sign by foreign investors, demonstrating Canada’s inability to efficiently move oil from its origin in Alberta to markets abroad.
“If you cannot get a pipeline through, a simple one with federal government approval, it signals to the rest of the world that Canada is not a good place to do business,†he said.
Slumping commodity prices have already sapped investment dollars from Canada’s energy patch. Spending has plunged 47 per cent to $43 billion in 2017, compared to $81 billion in 2014, according to figures from The Canadian Association of Petroleum Producers.
“Everyone thinks here in Ontario that the oil sands has nothing to do with us. How about 1,600 companies, several thousand jobs and about $4 billion in economic activity in this province alone,†McTeague said.
Can Alberta turn off its taps?
B.C. attorney general David Eby said his province is prepared to take legal action against Alberta and its oil companies if the proposed supply restrictions materialize. He also said he believes the legislation is a “bluff.â€
Bruce Ryder, an associate professor at York University’s Osgoode Hall Law School, said Alberta has the right to turn off its taps, but only as long as all provinces are treated equally.
“They do have that power. What they don’t have the power to do is discriminate against a particular province,†he told Â鶹´«Ã½ Channel.
Alberta’s legislation makes no specific reference to B.C. Saskatchewan Premier Moe did mention the province in his tweet on Tuesday.
McTeague says it is not unprecedented for a province to use natural resources as a bargaining chip.
“It happened 37 years ago here in Ontario when the (Alberta Premier Peter) Lougheed’s government dialed back about 15 per cent of crude deliveries to the province of Ontario, he said. “It was devastating. It did get both Ottawa, Ontario and Alberta back to the bargaining table.â€