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Don’t dump on oil and gas

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By: Graham Lane

Published: Winnipeg Sun, October 7, 2016

OPEC members call for a truce. Saudi Arabia and their oil-producing partners seek a balancing
of the supply and demand of oil. If the pact holds, expect the price of oil to jump – perhaps to
$70 to $90 per barrel (peak price was $145). Despite the hit on our pocketbooks, if oil prices
jump Canadians should cheer the price recovery.

The low price of the last two years has plagued not only OPEC but also Alberta, Saskatchewan
and Newfoundland Labrador – plunging their budgets deep into the red. That plunge contributes
to the federal government’s deficit, the loss of tens of thousands of jobs, and Canada’s immense
trade deficit.

Calgary’s downtown has a 25% vacancy rate; Alberta’s unemployment rate has soared; the
loonie’s value has fallen 30%; and the drop of revenue from fossil fuels for the federal
government will soon impact provincial equalization transfers. Over the last twelve months,
employment gains were so modest that immigration was twice job growth. Both federal and
provincial governments are into stimulus funding, borrowing billions on the top the trillion
already owed. Worldwide, 350,000 jobs are gone, 60 private firms have collapsed, and countries
dependent on oil revenue are less stable.

In short, a higher oil price, particularly for western Canada, is GOOD news. But, there are
pockets of society that views oil price recovery as a BAD event. The negative voices come from
strident environmentalists and many First Nations. They forget that oil and gas has helped power
Canada’s economy for half a century; the wealth that fossil fuels bring fund all of us.

In 2014, Manitoba’s second highest dollar export was oil. Most Manitobans heat by gas, heating
by electricity is twice as expensive, and where do you think electricity prices are going? Let’s get
real: oil and gas are important and will be for decades to come. Other countries envy our
resources while we pussyfoot glacially through regulatory minutiae slowing if not stopping new
opportunities and pipelines. Have we lost our minds?

The federal government reluctantly gave the go-ahead for B.C.’s massive north-west liquid
natural gas project,, potentially $36 billion is to be invested. But, the federal Libs smothered
enthusiasm by attaching 190 more conditions: talk about splashing water on the prospect. When
last did you hear a government praise an oil and gas project?

Opportunities for Manitoba Hydro to employ natural gas to save money and reduce continental
emissions were blown by increasingly catastrophic choices. They went with Wuskwatim,
Keeyask, Bipole III and a Minnesota-Manitoba transmission line, instead of a Brandon gas plant.
Their choice will cost around $15 billion instead of $1 billion for the gas plant. We have flared
gas from oil wells in south-western Manitoba rather than using that gas for electricity generation.
As for the Minnesota-Manitoba line, it still lacks needed presidential and state approvals.
Wasting money and relying on American regulators and utilities brings high risk and even higher
rates. It would have been so much better to have built that gas plant – favoured even by former
NDP Premier Schreyer.

Our politicians need to recognize that our natural resources bring wealth, then welcome a
recovery in oil prices and support pipelines to get what we are lucky to have to market.

Graham Lane heads Manitoba Forward (

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