Pipelines, Tar, Sands, and Royalties

Perhaps our government should take a lesson from Evo Morales. He changed the royalties his country (Bolivia) gets for oil and natural gas. They said it couldn’t be done, but it was.

One of the pipelines proposed would cross from somewhere near Edmonton, over the Rockies, to Kitimat. This Northern Gateway is estimated to cost perhaps $5.5 billion. This is a threatened alternative to the Keystone project, which would take the same tar/oil into the United States.

Both pipelines have environmentalists concerned.

In the US, certain watershed areas are claimed to be at special risk. Rerouting requires re-assessing and that seems to guarantee that nothing will happen in 2012. A cynic would expect that, the US election over, this hot potato will move forward rapidly.

In Canada, aboriginal groups are fearful of all the streams to be crossed; west coast naturalists think 200 extra tankers a year is too much risk. Meanwhile the Federal government seems to be trying to force the volume of dissent down, forcing similar complaints to be heard as one (one tactic being discussed), or changing the environmental assessment / debate rules altogether.

Doubtless this is an understatement of both the risks and the complex political and environmental maneuvering.

Now for the dumb question. The revenues expected from this pipeline (Northern Gateway version) seem to be about $1.2 billion. May I point out that this is projected, and over 30 years of operation. This is the stated tax revenue benefit to be expected.

Meanwhile the Alberta government has a report that says the oil producers could lose $72 billion over 9 years if the pipeline is not built.

I submit that the numbers above, if even approximately correct, show that we, as Canadians, are being shafted. A project priced at less than six billion will make the oil producers an extra 72 billion over nine years, and our taxes will capture 1.2 billion over thirty years.

Now for the dumb question: should we get Evo Morales to show us how to change the royalties equation? Should all Canadians be compensated for the environmental risk, with funds for extra monitoring, and excess funds for (God forbid!) things like lower tuition, affordable housing, and decent (e.g. hydro, water) infrastructure?

Is is such a dumb question to ask, what’s in it for us, and why is it such a small slice of the pie?

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