BC Chamber Op-Ed: Lack of pipeline capacity costs $50 million a day
The following op-ed was published September 24, 2013, in the Vancouver Sun.
By: John Winter, president and CEO, BC Chamber of Commerce
There’s not much good about the continuing prospect of losing $50 million a day. That’s the amount of money our country gives up on a regular basis because of over-tapped or non-existent energy pipelines to two key locations – south to the U.S. and west to the Pacific.
It’s also the name of a report released this week by the Canadian Chamber of Commerce in an effort to educate Canadians that their country is at economic risk because our lack of pipeline infrastructure prevents us from getting more product to more markets.
That means we’re effectively tied to one export customer, the U.S., to the exclusion of Asia. Our current lack of pipeline capacity to our strategic west coast stymies new Asian opportunities where demand is growing fastest. Equally important, the Chamber warns that our only export market, the U.S., is rapidly developing its own domestic sources at the same time its demand for oil and gas is waning. Clearly, Canada must diversify its export markets for energy, and fast, or current negative price pressures may get worse.
So, if you think $50 million a day is as bad as it’s likely to get, then think again. As the Chamber report rightly points out: “In the future, it’s going to really hurt.” Declining U.S. imports are mainly a result of insufficient U.S. line capacity and, for natural gas, a burgeoning U.S. domestic shale industry.
These facts are cause for concern, particularly when oil and gas represents some one fifth of Canada’s GDP. We very simply rely on it, and that’s not likely to change.
This deep U.S. discount needs to be put in some perspective. What does $50 million a day look like?
In B.C., it would cover the entire K-12 education program budget within three and a half months.
It could have paid for the entire Sea to Sky Highway improvement project in less than two weeks.
In a mere 12 days, $50 million a day could cover the cost of a complete redevelopment for St. Paul’s Hospital in Vancouver.
Nationally, in one day that amount would pay for Canada’s international aid to Honduras ($47 million in 2012), Malawi ($51 million in 2012) or Cambodia ($34 million in 2012).
In one week, that sum could pay for the federal government’s Youth Employment Strategy to help young Canadians gain the skills and experience they need to successfully transition to the workplace ($330 million per year).
There’s no question British Columbians should be concerned over the fact Canada is losing a significant opportunity to obtain full market prices, and in turn provide much needed financial support to, among other things, our health care, education and social programs.
Success lies in unlocking the bottlenecks such as insufficient U.S. pipeline capacity that drives heavy discounts, and working at fixing the similar lack of sufficient pipeline capacity to the west that prevents us from gaining access to Asia, where our demand is slated to double by 2035.
Those opportunities for obtaining market price are real and we must seize them. We have tremendous technical capacity, which comes with developing a country with so much territory and a comparatively low population. We are acknowledged innovators, as we continually use them to make our industrial processes safer and more efficient.
We have an impressive industrial safety culture in this country — and particularly in the natural resource industries. Safe plant operations, top-flight marine transportation and a pipeline industry constantly striving for greater safety through improved practices and enhanced technology are all very much part of that story. Indeed, giant steps are regularly taken toward technological advancement, and increased safety is a key driver.
Perhaps above all else, B.C.’s long experience in sustainable natural resource development shows we know how to plan, build, monitor and maintain infrastructure so that our environment is protected and our people can benefit from economic strength and community development.
Specifically, that means we need to foster private investment in the energy sector as we have in other resource sectors like mining and forestry.
What specifically should be done to solve the current problem and turn around our $50 million a day? Energy companies should be recognized for their moves toward a greener economy.
But changes must be made gradually, with a very close watch on energy markets. Because it is those markets that keep our province working.
What should be crystal clear to British Columbians is that we must build the missing infrastructure, gain better access to those important markets, or face some tough economic consequences.