The prospect has recently arisen of a Canada laced from coast to coast with new oil and gas pipelines.
That’s among the most profound of the reactions so far to the threat of U.S. annexation of Canada.
Last week, Ottawa reversed itself in supporting new oil and gas pipelines.
And Quebec Premier François Legault, whose province has adamantly opposed pipelines in the past, said he would approve a pipeline if Quebecers support it.
Federal Tory leader Pierre Poilievre is a longtime pipeline proponent.
“Why do the Americans have us by the throat?” Poilievre said in an interview last month.
“Because we don’t get our (oil) products to other markets.”
Canadians polled recently by Angus Reid Institute support new pipelines by a large margin.
On Monday, U.S. President Donald Trump imposed 25 per cent tariffs on imported steel and aluminum from all sources. And he plans 25 per cent tariffs on most goods from Canada and Mexico in about three weeks.
But for all the excited talk of new energy pipelines, they’re unlikely to happen.
There are faster and less costly means of protecting Canada’s sovereignty than launching new pipeline megaprojects.
For instance, Ottawa and the provinces, in a breakthrough in interprovincial relations, are finally getting serious about scrapping tariff and non-tariff barriers to trade and labour mobility here at home.
That measure alone could increase Canada’s GDP by about four per cent.
An all-out trade war of reciprocal tariffs imposed by the U.S. and Canada could shrink Canadian GDP growth by three per cent to six per cent.
Genuine free trade within Canada could offset much of that damage.
And Canada’s recent start in significantly strengthening the border includes a commitment by the Trudeau government to more aggressively fight money laundering.
The U.S. has long been annoyed with Canada’s comparatively casual regard for money laundering, which enables organized crime, drug and human trafficking, and terrorism.
If Canada finally starts imposing heavy penalties on financial institutions that chronically fail to report suspicious financial activity, we will have removed another justification for Trump’s animus.
But new pipelines won’t help.
The recent proposals to revive pipelines cancelled long ago have a surface appeal.
Like the Trans Mountain pipeline (TMX) opened last year, which carries Alberta crude to the B.C. coast, they could give Alberta oil and gas greater access to non-U.S. markets including China, Japan, India and Europe.
And the fossil fuels carried by the new pipelines, built entirely on Canadian soil, would be impervious to U.S. tariffs.
But reviving the abandoned Energy East, Northern Gateway and LNG-Québec pipeline projects would be fantastically expensive. And they would not be completed until long after Trump has left office.
Those ill-fated proposed pipelines, with a total length of 6,557 kilometres, had a combined budgeted cost of $34 billion when they were cancelled.
Their cost today would be much higher due to the same inflation and labour shortages that inflated the cost of the TMX to $34.2 billion from an initially planned $7.4 billion.
An expeditious option is to increase the TMX’s capacity by more than 30 per cent, to about 1.2 million barrels a day, by increasing its pumping power.
Finally, the economic viability of new fossil fuel pipelines is questionable.
The Paris-based International Energy Agency (IEA) forecasts a global glut in oil as rising production in Alberta and the U.S. outstrips demand by the end of the decade.
“Total (oil) supply capacity is forecast to rise to nearly 114 million barrels a day by 2030 — a staggering eight million barrels per day above projected global demand,” a recent IEA report concludes.
That could see Canada in 2030 with three fossil fuel pipelines under construction at prohibitive cost just as oil prices begin sliding into irreversible decline. There’s no assurance that oil prices prevailing in 2030 and thereafter will be sufficient to provide a return on the investments.
There has been no interest in revisiting those projects from their original sponsors — including Enbridge, TC Energy and the latter’s South Bow spinoff. (Full disclosure: I own shares in TC and South Bow.)
Indeed, a transitioning Enbridge is now among the continent’s biggest producers of alternative energy, principally wind and solar.
Meanwhile, Canada has a rapid-response, bare-knuckled means of dealing with U.S. tariffs.
And that’s to apply export taxes on U.S.-bound Canadian oil, gas, electricity, aluminum, potash, uranium and other critical minerals.
In recent polling, Canadians overwhelming support that approach. It would immediately raise pump prices, home heating costs and electricity bills for American consumers. And trigger, one has reason to hope, a U.S. consumer backlash against their president.
Those surtaxes would generate revenue for Canada, whereas committing to more pipelines would consume vast amounts of capital.
So, best not to act on the recent exuberance over pipelines.
Let’s focus instead on short-term, low-cost measures with the most promise of shutting Trump’s yap about Canadian annexation.
