Ewart: Tom Mulcair is sending confusing messages about oilsands development

Calgary Herald ^ | MARCH 14, 2013 | STEPHEN EWART

[thackney]

There is a gap in Tom Mulcair's logic about oilsands development that's big enough to run a pipeline through.

Actually, you could likely reroute the pipeline to skirt an environmentally sensitive aquifer or build a rail line to transport record amounts of crude oil by train and still have room to manoeuvre the tricky political terrain that Mulcair is hoping to cross.

The federal NDP leader is in Washington this week proclaiming his opposition to the proposed Keystone XL pipeline from Alberta to Texas just as he opposed the Northern Gateway pipeline from the oilsands to the B.C. coast for exports to Asia.

Ignore that last month he told the Calgary Chamber of Commerce the NDP would be a partner in energy development in Alberta. In Washington, the message is that he's worried about climate change and Canada's energy security.

It's confusing, but Mul-cair seemingly supports oilsands development but not export pipelines.

He acknowledged in a speech Wednesday at the Woodrow Wilson Center "the future of Canada's natural resource sector will be based on our access to global markets." However, a day earlier, in a speech to another business and political audience in Washington, D.C., Mulcair lamented that Canada has "never taken care of our energy security."

Talk about mixed messages.

Despite his misgivings about climate change, Mulcair supports moving bitumen by pipeline to oil refineries in Ontario, Quebec and the Maritimes.

He also said oilsands crude could go to export markets from East Coast ports and noted it would fetch better prices rather than the 30-per-cent discount on Canadian oil in the U.S. Midwest.

Mulcair's logic is either diplomatically adept or politically convenient. As a headline in the National Post succinctly put it; "Mulcair likes oilsands except when he doesn't."

The reaction from Alberta Premier Alison Redford, Saskatchewan Premier Brad Wall and federal Natural Resources Minister Joe Oliver - who have all been in the U. S. recently to lobby for Keystone XL - was immediate and uniform. They said Mulcair betrayed Canada's economic interests and, to quote Wall, cut "a swath of destruction for the energy sector."

The stakes are unquestionably high. Discounts on Canadian oil cost the economy $27 billion a year by some estimates and the Keystone debate will remain political fodder until the Obama Administration makes a decision on the much-delayed and once rerouted 830,000-barrel-a-day pipeline.

Mulcair and his supporters in the environmental community contend the leader of Canada's Official Opposition has a duty to counter messages from Big Oil and conservative politicians and express the concerns of millions of Canadians.

"Global warming is a real issue," he said. "We've got to start taking this seriously."

Unfortunately, it can be hard to take Mulcair seriously.

His position seems to be that developing oilsands for exports are bad idea. However, he supports producing enough bitumen to supply refineries in Canada - and exporting some refined products at world prices - to create jobs and increase energy security.

That counters his previous concerns that oilsands development has made the loonie a petro-currency that has undermined the manufacturing sector in Central Canada. He said he expects Canadians will use oil-sands to heat homes and run factories for the next 100 years.

Here's the tricky part. Canada's oil and gas reserves are so vast they couldn't be consumed by 35 million Canadians in any realistic time frame.

Problems will emerge if Canada doesn't export a substantial amount of bitumen because the economies of scale aren't sufficient to justify the cost of oilsands megaprojects merely to supply Canada.

It may seem counter intuitive, but building export pipelines actually secures Canada's energy security by providing the impetus for ongoing development of what Mulcair concedes is "a tremendous blessing" of natural resources in Canada.

Mulcair is correct that oilsands "can be a source of wealth and prosperity for our country for generations to come" but not with his wishy-washy position.

After the Arab oil embargo in the 1970s, Canada implemented interventionist policies that restricted exports and within a decade went from being a net exporter of oil to a net importer. After a return to market-based economics in the 1980s, Canada's oil and gas production more than tripled.

Oilsands development will always be a lightning rod and Mul-cair is correct when he said that "access to global markets will be based not only on demand for resources, but on the world's assessment of how we develop them."

He said principles like polluter pay for environmental damages are deeply ingrained with Canadians, but there are signs public policy is shifting on the ground to better address the need for a social licence to operate.

In last week's budget, the Alberta government added $60 million to the bill for oil and gas producers to pay for regulatory oversight. On Tuesday, the Energy Resources Conservation Board levied a $284 million charge on producers as a damage deposit to ensure abandoned oilfield operations are properly cleaned up. In both cases, industry simply accepted the change.

There's certainly more governments and industry can do for environmental stewardship in the oilsands but these are moves in the right direction.

It was Mulcair, after all, who quoted former U.S. president Woodrow Wilson that working toward environmentally and economically sustainable development must go hand in hand because "we cannot separate our most fundamental interests from our most deeply held beliefs."

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