Alberta’s next problem isn’t pipelines. It’s a world that’s moved beyond oil

OPINION: The Trans Mountain expansion will probably be built. But people hoping for a long-term rebound in Alberta oil prices are starting to look like fossils
By John Michael McGrath - Published on Jan 26, 2021
Trans Mountain is the last major project still standing that offers a realistic prospect of moving oil cheaply to global markets. (iStock/millraw)

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Let me start with a confession: I understand that lots of people have put a lot of effort into stopping various pipeline projects around North America, and I understand the reasons why. I just … have never really understood the passion for it, outside of Indigenous communities, where there’s real controversy about the quality or even existence of meaningful consultation to get prior informed consent. This is doubly the case with something like the Trans Mountain expansion, the subject of this week’s Political Blind Date: replacing an existing pipeline system with a larger, higher-capacity pipeline just doesn’t outrage me. (Sorry!)

Trans Mountain is, as far as these projects go, an attempt to be as inoffensive as possible while still expanding the country’s oil-export capacity. That, of course, is exactly the point of contention: people who don’t want the Albertan oil industry expanded don’t want to see it expand, so every means to add costs and complexity to new pipelines is fair game, in this way of thinking. And, while Tuesday’s episode was recorded well before the results of the United States election were known, the fact that new president Joe Biden’s first major act of Canadian consequence was to cancel the Keystone XL pipeline shows that the people trying to constrain the expansion of the oil sands have powerful friends.

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The current political leadership of Alberta is, predictably, furious about the Biden administration’s decision to cancel Keystone XL, and events of the past few years make the situation seem pretty bleak for them: Northern Gateway, Energy East, and now (pending future election results) Keystone XL have all been cancelled since 2015, leaving Trans Mountain as the last major project still standing that offers a realistic prospect of moving oil cheaply to global markets. No accident that Biden’s decision has increased the value of the Trans Mountain pipeline by default.

But barring some kind of political earthquake (the election of the federal NDP or Green party as a majority government would qualify), Trans Mountain will very likely be completed, even if “on time and on budget” is no longer really in the cards. The stark question for the oil and gas sector — and its political champions, such as Alberta’s Jason Kenney and even Ontario’s Doug Ford — is whether Canada will ever build another pipeline after that.

A growing chorus of experts is now predicting that global oil demand will peak by 2030. The International Energy Association said so in 2019; that bunch of tree-hugging hippies at OPEC joined it a year later. Not to be outdone, BP says that oil demand may never exceed the level it saw in 2019, thanks to the one-two punch of the COVID-19 pandemic and the rapid adoption of electric vehicles.

(This is, incidentally, why I never joined in the outrage over pipelines: the oil and gas companies can build all the pipelines they want. But the emergence of even marginally affordable electric vehicles  was always going to spell real trouble for the fossil-fuel lobby.)

Of course, projections can be and often are wrong, as anyone who was thoroughly steeped in the earlier “Peak Oil” debates of the 2000s can attest. But, in effect, people hoping for a long-term rebound in Alberta oil prices need to imagine a world in which electric vehicles become less popular and affordable, while American oil and gas fracking becomes less effective and efficient. Probably, for good measure, they also need to imagine that the dramatic decreases in renewable-energy costs we’ve already seen over the past decade are reversed. None of that is impossible in the sense of “the physical laws of the universe prevent it,” but I sure hope my pension isn’t being staked on any of those outcomes.

Meanwhile, even the politics of the conservative ardour for fossil fuels could start to get more complicated, as Ontario joins the list of jurisdictions working to attract more electric-vehicle manufacturing. It’s one thing to say you support pipelines, and Ford does, but he also wants to see Ontario host more automaking jobs. If those happen to be making EVs that destroy a gasoline consumer in the country’s GDP statistics with every single purchase, well, no Ontario government is actually going to lose sleep over that. Or at least it shouldn’t.

So while I suspect that Trans Mountain will be completed and will eventually deliver diluted bitumen to the British Columbia coast sometime this decade, I wouldn’t be terribly optimistic that another major pipeline will ever make its way from northern Alberta to the Pacific.

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