Energy East hypocrisy costs all Canadians

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What is the relationship between the following three events?

• Foreign Affairs Minster Stéphane Dion says in February that the government won’t stop the controversial $15-billion arms sale to Saudi Arabia despite what he terms the Kingdom’s “terrible” human rights record because “very surely … the equipment in question would be sold to Saudi Arabia by a country that has fewer scruples, and this would not change one iota the situation of human rights in Saudi Arabia.”

• In 2015, Eastern Canadian refiners import hundreds of thousands of barrels a day of crude oil from Saudi Arabia, Algeria and Angola, countries ranked badly by Human Rights Watch.

• The federal government announces a nine-month extension to the 18-month Energy East regulatory process to study whether the pipeline would increase greenhouse-gas emissions and to allow for additional consultation with aboriginal and other interest groups.

Mr. Dion is correct in saying that stopping the arms sale to the Saudis would simply mean they would buy the arms elsewhere. But their ability to purchase those arms is enabled by the cash that Canada and other oil-importing countries send them, as do oil purchases from Algeria, Angola and the other oil-producing states that make up the Middle East-North African conflict hotbed. Non-oil-producing countries have little choice but to send those funds. But Canada has a choice. The proposed Energy East pipeline would eliminate those imports and open an export corridor for Canadian oil to world markets, ending the payment of billions of dollars to those corrupt countries while adding billions to our country's economy.

Just as stopping the Canada-Saudi deal would simply mean the arms are produced elsewhere, any emissions cuts from stopping Energy East would be offset by emissions generated by production and transportation of the oil we import. So why are we microscopically scrutinizing the environmental impact of our own oil production, while giving imported oil a free ride? Should we not also consider these countries' deplorable treatment of women, persecution of dissidents, repression of journalists and discrimination against minorities in comparison with the freedom and social justice record under which our oil is produced? How do we factor in the human cost of enabling the purchase of arms by the fighting factions in what is a perpetual war zone? Finally, why would Canada choose to be dependent on foreign oil when we don't have to be?

These reasons alone are enough to make the Energy East project a national priority, but even more compelling are the economic implications. Canada produces 3.8 million barrels of oil a day. World prices have fallen by about 70 per cent over the past year. That's bad enough, but few Canadians know that our oil is sold far below the world price, owing to lack of pipeline access to world markets.

This discount currently amounts to about $10 a barrel, meaning we forfeit $38-million every day Energy East is deferred. That means the $250-million injection from the federal stabilization fund promised by the Prime Minister in his recent visit to Alberta wouldn't even offset one week of market access losses. It also means the cost of his government's nine-month regulatory deferral is a staggering $2.7-billion. And since 90 per cent of Canada's production is exported to the United States, that amounts to a $2.4-billion subsidy to U.S. consumers.

But that still doesn't reflect the full impact of this unnecessary regulatory delay. In the days following the Energy East deferral, oil and gas companies announced thousands more layoffs and further cutbacks to 2016 capital investment, bringing the total to $15-billion, more than 20 times the $700-million infrastructure funding Mr. Trudeau announced in Alberta. And let's not forget the substantial tax revenues that $38-million a day and $15-billion annual capital investment could have created. Instead, we have the Prime Minister's spending promises that taxpayers will have to repay.

Albertans are generally positive, resilient people. But they are fast losing hope. In place of action, they see unnecessary delays and the possible demise of a critical project. And they see a national government expressing more concern for the minuscule 0.12 per cent of global greenhouse-gas emissions from the oil sands than the tens of thousands of workers without jobs. Now comes a Quebec court injunction against Energy East, the very province that would benefit most from replacing foreign imports with Canadian oil.

When bad things happen, the first priority is to identify those we can do something about. We can't control world oil prices, but we can ensure we're getting that world price, rather than giving our oil to the Americans at a 50-per-cent discount.

Gwyn Morgan is the retired founder and CEO of Encana Corp. He has been a director of five global corporations.