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Hughes op-ed on failing energy policy in Edmonton Journal

October 25, 2018

Post Carbon Fellow David J. Hughes’ op-ed on falling energy royalties and pipeline politics was published in the Edmonton Journal.

From the article: 

Data from the Canadian Association of Petroleum Producers show that royalties paid by industry fell 44 per cent between 2000 and 2017 — from $11.9 billion to $6.6 billion — a period in which hydrocarbon liquids production increased by 77 per cent. The effective Canadian royalty rate decreased from 18.3 per cent on $65.1 billion of sales revenue in 2000 to 6.2 per cent on $107.1 billion in 2017.

The situation in Alberta is even worse, where the effective royalty rate decreased from 19.5 per cent to 5.1 per cent over this period.

The federal government also tells us that its purchase of the Trans Mountain pipeline (TMX) is in the “national interest” based on false claims that exporting Alberta bitumen to Asian markets will provide higher prices. But the U.S. Gulf coast has the world’s largest concentration of the complex refineries needed to optimally refine heavy oil.

Two new pipelines to the U.S. with double the capacity of TMX are under development, which will eliminate pipeline-capacity constraints well before the earliest TMX completion date of 2022.

Transport costs to the U.S. Gulf coast are lower than sending oil to Asia via TMX and tankers. Together, these factors mean Alberta’s heavy oil will sell in the U.S. for $2-$5 per barrel more compared to Asian deliveries.

The bottom line: Canada has no energy plan beyond pedal-to-the-metal export of its non-renewable energy assets. The rhetoric from Premier Rachel Notley’s government that the sky will fall without TMX and the federal government’s “national interest” justification for buying it have no merit.