Don Gillmor’s latest book is On Oil.
In 2006, 21 years after he’d left office, former Alberta premier Peter Lougheed toured the oil sands. “It’s just a moonscape,” he said. “It is wrong, in my judgment, a major wrong, and I keep trying to see who the beneficiaries are … it is not the people of this province, because they are not getting the royalty return they should be getting. So it is a major, major federal and provincial issue.”
With a looming existential crisis, the oil sands have once more become a major political issue. Last month, in an open letter to the leaders of the four main political parties, energy executives wrote that oil would “ensure Canada can defend its sovereignty.” It asked for the government to declare a “Canadian energy crisis,” to remove regulatory and environmental hurdles, and overhaul and simplify Bill C-69, which hinders pipeline construction. This would open the door for a revival of the Energy East pipeline, cancelled in 2017, which would deliver oil from Alberta to New Brunswick. Most of that oil would be exported overseas, with the remainder used to supply eastern Canada, weaning us off our dependency on foreign oil, chiefly our tantrum-prone southern neighbour.
Energy self-sufficiency is an enviable goal. An expansion of West-East pipelines would have been a brilliant idea in 1980, when the vilified National Energy Program was implemented. Had that program been better drafted and hadn’t been a Trojan horse for increased federal powers (and the price of oil hadn’t cratered a year later), perhaps we might have something approaching energy security now.
Opinion: Canada’s new pipeline push will turn out to be a costly blunder
It is harder to make the case for a new pipeline now. The Trans Mountain pipeline extension (TMX), which began operating in 2024, is 980 kilometres long, took 12 years to construct and cost $34-billion, most of it taxpayers’ money. Energy East would involve 1,600 kilometres of new pipeline and the retrofitting of 3,000 kilometres of existing pipeline. If TMX is any indication, it could cost $50-billion and take 15 years to build, depending on regulatory and environmental hurdles.
What does the energy landscape look like in 2040?
The original Energy East proposal had up to 90 per cent of the oil slated for export, but both Europe and China are decarbonizing at a rapid clip. In January of this year 96 per cent of new vehicles in Norway were EVs. They are the global leader but it is impossible to predict how far this trend will go in the next decade. S&P Global announced that gasoline demand will peak this year. Both the U.S. and China may have already peaked.
In their letter, the energy executives stated, “All plausible global outlooks forecast oil and natural gas remaining amongst the world’s largest sources of energy for decades to come.”
Opinion: Why aren’t Indigenous peoples included in Canada’s fresh talk of energy development?
This may be true, but the International Energy Agency, another plausible source, estimates peak oil consumption will arrive before 2030. Goldman Sachs has it at 2034. The Canadian Energy Regulator predicts that our crude production will fall 75 per cent by 2050 if we reach net zero.
As premier, Peter Lougheed made it abundantly clear that the people of Alberta owned the resources; they were the landlords and oil companies were the tenants. Under Ralph Klein’s wobbly reign (1992-2006), that arrangement was effectively reversed, with the oil companies becoming landlords, the citizens of Alberta reduced to wealthy peasants.
We need to adapt Mr. Lougheed’s question here: Who are the beneficiaries of an expanded oil and gas sector and new pipelines?
Oil and gas are still a significant part of the economy and eastern Canada would be better off with Canadian oil, but it needs to be a private sector initiative, and it’s not clear it has the appetite for that expense and risk.
Opinion: What if Canada’s new pipeline ambitions are just a pipe dream?
In the U.S. the last large oil refinery was built in 1977 and dozens have closed since then. They are expensive and can take a decade to complete. The market is wary of that combination in what is perceived as an industry that is peaking. Markets determine oil prices and we’ve seen dips in recent weeks that flirt with the break-even point for both oil sands production and fracking in the U.S. If it dips below that threshold, security will be elusive.
Energy security is increasingly critical, and oil and gas will be with us for decades, but at this point, public money should be steered toward renewable energy. One analysis flagged Canada as the G20 country with the highest subsidies for fossil fuels and the lowest subsidies for renewables.
A pipeline will be sold as a nation building initiative, with a subsequent plea for public money. It is a potent marketing hook, but we should resist it.
Mr. Trump sees oil as key to his retreat to a mythical past, a time when America’s people and picket fences were white, when Elvis’s hips were the biggest threat to the national soul. His current economic policies are taking the country back to 1930, while his energy policies, which have regressed from “drill baby drill” to reopening coal plants, may take the country back to the 19th century, the century he appears most comfortable in. Mr. Trump may want to drag America back through the last century, but we shouldn’t follow.