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Pipelines are not just an Alberta issue

Pipelines are not just an Alberta issue

Source: The Fraser Institute
Authors: Steve LafleurAshley Stedman

The governments of Alberta and British Columbia are waging an intense trade dispute over the proposed Trans Mountain pipeline expansion, which would run between Edmonton and Burnaby. The details of the feud, to date, have been well-documented. After B.C.’s NDP government, led by Premier John Horgan, said it wants more time to review the project (which already has federal approval), the Alberta government, led by Premier Rachel Notley, announced a ban on B.C. wine imports and halted talks about electricity imports from its western neighbour.

While this issue is often framed as Alberta (and its interests) versus B.C. (and its interests), in reality, the benefits of Alberta’s natural resource sector extend beyond provincial borders. Moreover, Canadian oil will get to market one way or another. This isn’t a debate about whether or not oil will get to market, but how the oil will get there, which has crucial economic and environmental implications. In short, we should think about how to maximize the benefits of Canada’s natural resources while prudently managing environmental risks.

Let’s start with the economic implications of pipelines. At the moment, due to pipeline constraints, Canadian oil producers are selling unrefined bitumen at a fraction of the price many competitors receive. Western Canadian Select has long fetched lower prices per barrel than West Texas Intermediate for a variety of reasons, but the Canadian crude discount recently reached $27.50 per barrel. Increasing pipeline capacity would reduce this discount by reducing export constraints. The Trans Mountain expansion would have the additional benefit of increasing access to tidewater and higher prices in the world market, rather than relying so heavily on the United States.

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