A primary lesson in political communications is that there is room in the public mind for only one big political news story at a time, and whoever drives that one big story wins twice: their story sets the headlines, and stories they don’t like are pushed to the margins.
When Alberta premier Rachel Notley called a news conference this week to announce her NDP government is spending $1.4 million on billboards and other advertising to promote the Trans Mountain pipeline, she was driving the one big story the oil industry wants, and both she and the industry won. The industry’s story about the supposed benefits of the pipeline was the talk of the town and Rachel Notley got profile as their spokesperson.
Meanwhile, stories that neither industry nor Notley want in the public are kept in zones of silence at the margins. If these stories got the attention they deserve it could change the course of the pipeline debate.
Perhaps the biggest story getting marginalized in the pipeline debate is the looming cost of environmental clean up for Alberta’s oil industry. Canadians need to realize that the biggest environmental clean up is at the source of pipelines, not their terminus. The cost to clean up a potential spill on the BC coast is a fraction of the cost to clean up the existing contamination in Alberta.
The expanded Trans Mountain pipeline will carry diluted bitumen from open pit mines and underground operations in Alberta’s oil sands. Eventually these mines and operations must be cleaned up. Some of the largest and oldest tailings ponds, which are the size of lakes, are built on the banks of the Athabasca River. If they rupture the toxins will contaminate one of the world’s grandest and purest watersheds, the Mackenzie. The bitumen is dug from some of the biggest open pit mines on the planet and the region is laced with major industrial sites and pipelines that pose toxic hazards, all of which will need to be reclaimed.
In theory the companies that make these messes are responsible for cleaning them up. In practice the liability could ultimately be on taxpayers. In July 2015, Alberta’s Auditor General reported that the Alberta government is liable for up to $20 billion for cleaning up the oil sands mines alone. That is just the beginning. The Alberta Energy Regulator has internal estimates that the total cost of cleaning up all Alberta’s oil industry (conventional and oil sands) will run to $260 billion, which could crush the finances of Alberta’s government.
Another zone of silence surrounds the story of royalty rates. Under Canada’s constitution provincial governments own natural resources, and when they sell those resources they are paid royalties. Royalty rates are the product of negotiations between the seller --government-- and the buyer -- industry. The oil industry brings to the bargain vast amounts of capital, technical expertise, and organizational capacity. On its side, the Alberta government brings the bitumen; the water; the land; the highways, hospitals, universities, and schools that allow the work to happen; the rule of law; and vast amounts of its own research funding.
Guess who won the negotiation. In 2016, the five largest oil sands projects in the Ft McMurray region (Syncrude, two Suncor mines, Imperial Oil, and Cenovus) paid an average royalty of 1.4% of gross revenues. When I asked an energy economist if Alberta’s royalty rates were unusually low he replied, “You can’t get lower than these rates without giving it away for free.”
This means that for every thousand barrels of bitumen the government of Alberta brought to the table, the oil industry got the value from 986 of them and the people of Alberta got the value from fourteen of them. It’s little wonder the Alberta government has earned more in recent years from alcohol sales and gambling revenues than from bitumen royalties. Neither the Notley government nor the oil industry are advertising those numbers.
Royalty rates go up and down with oil prices; if oil hits $120 a barrel royalty rates reach nine percent, which would be a great deal of money, though rather less than the 91% the industry would be getting.
Another zone of silence concerns the destination of profits from the oil sands industry. Although some of the largest oil sands companies are headquartered in Canada, recent research indicates a majority of investors in the oil sands are foreign, which means a majority of the profits flow out of Canada to the US, China, and Europe. So the Notley government is pouring money into an advertising campaign that promotes a foreign-owned pipeline company that will ship raw bitumen gathered by foreign-owned corporations to sell for processing in foreign lands.
These are stories that should be brought from the margins into the headlines, from the zone of silence to the zone of public debate. That’s how healthy democracy works. The public has a right to hear them all because long after the last barrel has been shipped to distant lands and the last dividend paid to distant shareholders, the costs will ultimately be theirs.
Kevin Taft is author of the 2017 book Oil’s Deep State. He has a PhD in Business and served three terms in Alberta’s legislature.
Comments
Whose "national interest", Trudeau and Notley?
So the "Alberta advantage" seems to be the inability to see when we're being played for suckers. We've sold our birthright for a mess of pottage.
The other unacknowledged costs include the contamination problems resulting from the fracking that has spread across Alberta and that supplies diluent for the oil sands and fracked gas to run their operations. No studies have been done to determine the extent of the water and soil contamination resulting from this dangerous activity. It is not possible to clean an aquifer that has been contaminated; formerly productive soils take years, if not decades, to rehabilitate. The costs to human and animal health are all externalized, along with the costs to our agriculture industry.
Not to mention....Climate Change.
When the bitumen oil sands are gone (the sooner, the better), the childrens and the grand-childrens of people who worked and lived in Alberta today, will have to pay for the cleanup. I don't know what they will be thinking, but I have a good idea.
The kinder morgan pipline will move the tar sands 3 times faster to bring the co2 in the atmosphere over the limit for life on earth.
Of course British Columbians have known for YEARS what a deplorable MESS northern Alberta is! And of course, it started small, and only as it has grown to the ugly gigantic MORDOR that it now is, that we rail against it, including the issues with cleanup!
All this is the reason for the massive OUTCRY that is going on, especially here in the lower mainland! So far, the messes here have been relatively small, so we want to PREVENT the big one BEFORE it happens! And the ONLY WAY to do that is to STOP THE PIPELINE from ever being expanded!!!
Does Notley not understand this, I'm pretty sure Trudeau doesn't and I really think in spite of having children neither of them care.
The reason Oil/Gas proponents bury the news about the remediation costs is that they have absolutely no intention of shouldering this obligation and are, no doubt already devising their cowardly hit and run exit strategy.
The royalties are one thing, remediation costs are something else entirely and should be levied as a tax against every aspect and profit centre of the oil/gas/petrochemical industry. It must be enshrined in federal and provincial laws, and if necessary defended all the way to the Supreme Court. There must be absolutely no loophole left for the industry to slither through. Of course the taxpayers of Canada will end up contributing to any remediation fund but that was always in the cards - it is just a matter of what percentage, partial or 100?!. It is the industry, not satisfied with its endless subsidies, that has always evaded its clean up responsibiities.