Canada’s Federal government presented its budget this past week and unlike the provincial one, it is a much more difficult item to get a handle on very easily. Because the Federal budget deals with all of Canada, it sometimes takes many months for the Saskatchewan ramifications to appear. I am sure there will be consequences for our province because it appears there will be significant cutbacks in certain areas.
It is not the cutbacks this week that I wish to comment on. There is an item in the budget which talks about putting money in place to enhance exports of Canadian resources. I am presuming that this item is directed at the proposed pipeline from Alberta to Kitimat, British Columbia. This pipeline along with the one to the Texas Gulf Coast has certainly been news items of significance.
We all know that the environmental lobby, particularly those that don’t like the oilsands development, have been very vocal about these pipelines. What I find disappointing in this Federal budget is that there is not a corresponding initiative to enhance refining and pipelining of finished products in Canada. A few weeks ago, you saw me make comments about the discounts that are affecting western Canadian oil and the fact that American refiners are taking significant advantage of this price differential.
On a quick recent trip to the United States, I had the opportunity to have a long chat with a gentleman who has spent his entire career in the pipeline business. He worked primarily out of Edmonton, Alberta. I was amazed to find out that this gentleman had the same passion that I do for upgrading and refining our oil and gas products in western Canada rather than shipping them elsewhere to be refined. His statement to me was that most people in Alberta feel the same way and that they are very disappointed that the Alberta government has not been pushing the 50/50 mandate that Peter Lougheed talked about decades ago. I specifically asked the question about pipelining refined products like diesel fuel for long distances. His answer was that it not only is doable but takes half of the energy required to pipeline raw crude.
So the question begs to be asked….if it takes half the energy and the end product is worth many times more per litre…why are we not doing it? His feeling on it was that most of the crude going into the pipelines is still owned by large American multi-national oil companies who have their own refining operations in place and are wanting to take advantage of escalating gasoline and diesel fuel prices worldwide. Most of these companies don’t really give a darn about the economies of Saskatchewan, Alberta or Canada for that matter unless it is because governments put legislation in place which hinders their particular business plan.
I know that is a strong statement to make but it certainly appears to be the truth of the matter. I am not blaming the people that own the pipeline industry. They are simply a method of transportation. But who I am blaming are the various provincial and federal governments who have not put in place the necessary regulatory, royalty and taxation regimes to encourage the upgrading, refining and secondary processing of our huge oil and gas resources.
Both the Saskatchewan budget and the Canadian budget show that our governments have a fixation with selling as much raw resources as possible in order to satisfy their spending appetites. These resources, I believe, would be far more valuable in the long term if we are selling finished product. The price of gasoline and diesel fuel, which is set in the New York Stock Exchange, is going up worldwide. If American refiners can be shipping 4.5 million barrels of refined products a day off the Gulf Coast than why cannot Canadians refine and pipeline the same products to offshore customers? Any one that has cleaned up after a diesel fuel spill as compared to raw oil will tell you there is no comparison in the damage to the environment. Diesel fuel is easy to clean up compared to the raw product.
It is time governments of all stripes and levels start thinking about our welfare in the coming decades rather than simply paying tomorrow’s bills. I thank the gentleman in the pipeline industry for giving me more knowledge and confirming my beliefs. Saskatchewan with our huge oil reserves needs to have the courage to bring about these changes. I believe the PC Party has shown with our past experience in building upgraders and developing new markets that we need to be leading this agenda. We have shown in the past the courage of our convictions.
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These issues must be debated for “The Right Reasons”.