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Gwyn MorganWhat is the relationship between these events?

  • Foreign Affairs Minister Stephane Dion announces the federal 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 would be sold to Saudi Arabia by another country and this would not change one iota … human rights in Saudi Arabia.”
  • In 2015, Eastern Canadian refiners imported hundreds of thousands of barrels per day of crude oil from Saudi Arabia, Algeria and Angola; countries whose Human Rights Watch ranking is very poor.
  • 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.

Dion is correct that stopping the arms sale to the Saudis would simply mean they would buy the arms elsewhere. But the Saudis’ 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 enabling 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 even more billions to our country’s economy.

Just as stopping the Canada/Saudi deal would simply mean the arms are produced elsewhere, any emissions reduction from stopping Energy East would be offset by emissions generated from 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?

And shouldn’t we also consider their 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?

These reasons alone are enough to make the Energy East project a national priority. Even more compelling are the economic implications. Canada produces 3.8 million barrels of oil per day. World prices have fallen by some 70 percent over the past year. That’s bad enough, but few Canadians know our oil is sold far below the world price due to lack of pipeline access to world markets. This discount amounts to about $10 barrel, meaning we forfeit $38 million every day that Energy East is deferred. That means the $250-million injection from the federal stabilization fund promised by Prime Minister Justin Trudeau 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 percent of Canada’s production is exported to the U.S., that amounts to a $2.4 billion subsidy to U.S. consumers.

But that still doesn’t reflect the full impact of this completely 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 Trudeau announced in Alberta. And let’s not forget the huge tax revenue that $38 million per 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 percent of global greenhouse gas emissions from oilsands than the tens of thousands of workers without jobs.

Now comes a court injunction against Energy East by Quebec, 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 for half price.

Gwyn Morgan is a retired Canadian business leader who has been a director of five global corporations.

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