Gasoline prices as high as $2 per litre in British Columbia could be part of a wide range of consequences felt across Canada if the Alberta government makes use of legislation to limit the flow of key commodities from the province, predicts a leading petroleum industry analyst.
Dan McTeague of the online tech company GasBuddy warns such a move by Rachel Notley鈥檚 NDP government could drag down the loonie and price of oil, spook foreign investors and jeopardize thousands of jobs.
The Alberta government recently introduced legislation that would allow for the restriction of oil, gasoline and natural gas leaving that province. Violators would face fines of up to $1 million a day for individuals and $10 million a day for corporations.
that his province will also introduce legislation to restrict oil exports to B.C.
鈥淚f fuel tanks in British Columbia start to run dry because Alberta has turned the taps off, it won鈥檛 be Saskatchewan filling them up,鈥� he wrote.
The legislation is Alberta鈥檚 latest salvo in the battle over the $7.4 billion expansion of the Trans Mountain pipeline stretching from Edmonton to Burnaby, B.C. In 2016, Ottawa determined the project to be in the nation鈥檚 interest.
The B.C. government has raised safety concerns, primarily about the increase in tanker traffic in its coastal waters as more oil is shipped to foreign markets. The province has asked the courts to determine who has jurisdiction over the pipeline within the province.
Houston-based Kinder Morgan has put the project on financial life support, suspending all non-essential funding, until the federal government sufficiently reassures investors.
Prime Minister Justin Trudeau met with Notley and B.C. Premier John Horgan on Sunday. He said the federal government will hold talks with Kinder Morgan to ensure the project鈥檚 completion.
Notley has said the legislation is not meant to punish B.C. McTeague agrees that the knock-on effects could be felt far beyond that province鈥檚 borders.
鈥淲e could see a further decline in oil鈥檚 value. Given it is our number one export, that means the Canadian dollar would take a hit. Most of our fuel is based on and priced in U.S. dollars,鈥� he told CTV News Channel on Tuesday. 鈥淭he Canadian dollar cut to less value for oil means higher prices for all Canadians.鈥�
McTeague warns the failure of another yet pipeline project would be seen as a warning sign by foreign investors, demonstrating Canada鈥檚 inability to efficiently move oil from its origin in Alberta to markets abroad.
鈥淚f you cannot get a pipeline through, a simple one with federal government approval, it signals to the rest of the world that Canada is not a good place to do business,鈥� he said.
Slumping commodity prices have already sapped investment dollars from Canada鈥檚 energy patch. Spending has plunged 47 per cent to $43 billion in 2017, compared to $81 billion in 2014, according to figures from The Canadian Association of Petroleum Producers.
鈥淓veryone thinks here in Ontario that the oil sands has nothing to do with us. How about 1,600 companies, several thousand jobs and about $4 billion in economic activity in this province alone,鈥� McTeague said.
Can Alberta turn off its taps?
B.C. attorney general David Eby said his province is prepared to take legal action against Alberta and its oil companies if the proposed supply restrictions materialize. He also said he believes the legislation is a 鈥渂luff.鈥�
Bruce Ryder, an associate professor at York University鈥檚 Osgoode Hall Law School, said Alberta has the right to turn off its taps, but only as long as all provinces are treated equally.
鈥淭hey do have that power. What they don鈥檛 have the power to do is discriminate against a particular province,鈥� he told CTV News Channel.
Alberta鈥檚 legislation makes no specific reference to B.C. Saskatchewan Premier Moe did mention the province in his tweet on Tuesday.
McTeague says it is not unprecedented for a province to use natural resources as a bargaining chip.
鈥淚t happened 37 years ago here in Ontario when the (Alberta Premier Peter) Lougheed鈥檚 government dialed back about 15 per cent of crude deliveries to the province of Ontario, he said. 鈥淚t was devastating. It did get both Ottawa, Ontario and Alberta back to the bargaining table.鈥�
