Pipe Dreams

Energy East pipeline is for export, not Atlantic Canadians
October 1, 2013

On a recent trip to an oil refinery in Saint John, Prime Minister Stephen Harper said that, with TransCanada's proposed Energy East pipeline, "we're not just expanding our markets for our energy projects... We are also at the same time making sure that Canadians themselves benefit from those projects and from that gain in energy security."

It's refreshing to finally hear Harper talk about energy security for Canadians. This country is vulnerable to the next international oil supply crisis because it still imports almost half the oil Canadians use.

Atlantic Canadians are particularly exposed, dependent on imports from dodgy sources like Algeria, Saudi Arabia, and Angola for more than 80% of the oil it takes to heat their homes and fuel their cars through long, icy winters.

But would TransCanada's Energy East pipeline really give Atlantic Canadians the energy security they need? Not necessarily. Piping oil from far-off Alberta to Atlantic Canada might make corporate sense, but it doesn't make common sense.

Although East Coast consumers would love to get cheaper western oil, Alberta's tar sands producers have the opposite aim. They simply want to reach tidewater to get the world oil price.

TransCanada is teaming up with Irving Oil to build an ice-free, deep-water port in Saint John to receive the world's largest oil tankers and export Western Canadian oil to the globe's most lucrative markets.

It's clear that the oil on TransCanada's proposed line would go to the highest bidder and that Ottawa would not protect Atlantic Canadians' oil needs before allowing exports.

Newfoundland's offshore oil fields produce almost 200,000 barrels of oil a day, enough to meet all the oil demand in the four Atlantic provinces. Wouldn't East Coast residents be most energy secure if they relied totally on their own oil?

Absurdly, Newfoundlanders don't get the oil they produce. Most of it is exported and the United States gets first access to it through NAFTA's proportionality clause.

NAFTA's proportionality clause works in the interests of corporations — not Canadians. The clause was crafted to allow petro-corporations, most of them foreign, to export as much Canadian oil and natural gas to the U.S. as possible. It was written before the end of the age of cheap oil and before we recognized the looming catastrophe of climate change.

But President Barack Obama's decision to temporarily halt TransCanada's proposed Keystone XL pipeline broke the bargain that underlies NAFTA: guaranteed access for Canadian energy exports to the U.S. market, in return for U.S. first access to Canada's energy resources.

It's clear that the U.S., under NAFTA, can block Canadian energy exports at will. Why should we continue to give the Americans unlimited access to our energy?

If Washington attempts to use NAFTA to stop Atlantic Canadians from getting first access to their own oil, Canada can give six months' notice to terminate NAFTA, as Obama and Hillary Clinton threatened to do during the 2008 Democratic party primaries.

Russ Girling, president and CEO of TransCanada, calls the proposed Energy East line a nation-building project like the Canadian Pacific Railway and the TransCanada Highway. It is no such thing. It is merely an Alberta tar sands export route for transnational oil corporations dressed up in nationalist clothing.

Most Atlantic Canadians live on the coast or near it. There is no need for a pipeline to bring most of them oil when it can be shipped in. Why build a pipeline and risk spills and confrontations with First Nations over traditional territory when you don't have to do so?

Double-hulled tankers are safer than oil pipelines. A pipeline will demand oil to fill it for half a century, but tankers can be phased out as oil use falls.

Phasing out oil as we increase our use of electricity produced by renewables is the only real long-term solution for energy security. We can use Newfoundland's declining oil output as an impetus to transition the four Atlantic provinces to a low-carbon society.

If Harper really cared about Atlantic Canadians' energy security, he'd say "yes" to Atlantic oil for Atlantic Canadians and "no" to a spill-prone oil pipeline from Quebec to Saint John.

(Gordon Laxer is a political economist and the founding director and former head of the Parkland Institute at the University of Alberta.)