We are being inundated with discount frenzy and it’s not just annoying, it could be life-threatening.
I’m not talking about the onslaught of huckster ads encouraging us to buy, buy, buy on Black Friday, or even today, Boxing Day. No, the truly crazy-making discount frenzy is the barrage of half-truths, misinformation and outright lies blaming Alberta’s woes on the so-called discount on Canadian oil. That’s some serious snake oil (aka propaganda) that is sabotaging our chance to keep the world habitable for our children.
Politicians in Ottawa and Alberta are spinning a good yarn. Their tall tale taps into deeply entrenched Canadian insecurities as well as anxieties about U.S. control of Canadian resources. The problem is, like any good yarn, it’s full of blarney. The truth is that there is no discount on Canadian oil as most people understand the term.
Lower quality = lower price
Yes, there is a price differential between Canadian oil and most U.S. oil, but it’s not because of any “discount.” It’s because Canada’s heavy crude, called Western Canadian Select, is a lower-quality product.
If Aunt Jemima syrup sells for a quarter the price of pure maple syrup that isn’t referred to as a “discount.” Both syrups are used as toppings on pancakes, but they are not equal quality or equally tasty, so no one expects they would sell for the same price. And they don’t.
The same is true for pickup trucks, chocolate, and any of the other products that hucksters are promoting with big discounts. If you agree to buy a top-of-the-line Dodge RAM 3500 or premium Swiss chocolate for a big discount, you would object if the seller instead delivered a low-end Nissan Frontier or a Mars bar. They are different products, selling for different prices. The price differential between the cheaper product and the expensive one is never referred to as a discount. These products are not interchangeable, nor are heavy crudes and lighter oils.
The simple fact is that not all oil is equally valuable The price for a barrel of oil depends on many factors: the type of oil, the difficulty and cost of refining it, as well as the cost, distance and method needed to transport it.
These factors are what drive the price of Canadian oil down, not a discount. Yes, oilsands crude typically sells for $15 to $25 less than lighter oil, but it's because it's an inferior, heavier oil that is more expensive to transport and refine. Occasionally, as in October, the differential spikes — often because a pipeline has ruptured or a refinery has shut down — but generally quickly returns to the average margin, as it did this fall.
Heavy oil transportation costs are also higher, primarily because it is thicker and has to be diluted with an expensive, gasoline-like lubricant known as condensate to make it slippery enough to pump through pipelines, which an extra cost that lighter oils don’t require. A recent government report estimates that diluting with condensate costs an additional $14 on each barrel of heavy oil shipped.
Tack on the higher costs of refining the complex, sulphur-rich hydrocarbons in heavy oil and there you have it: the price differential explained, without resorting whining about Canada or Alberta being picked on. In fact, if you correct for higher transport and refining costs, most of the time Canadian oil has been selling at a premium, not a discount.
Canadian oil prices will likely drop even further in the future as new fuel standards for marine shipping kick in. The new rules, known as International Maritime Organization (IMO) 2020, will limit the use of lower-quality, higher-sulphur heavy sour crude like those produced in Alberta. This will shrink Alberta’s share of marine fuel market and add an additional two to three dollars a barrel in refining costs to remove the sulphur.
Canadians, including our media, like to mock Donald Trump for his Big Lies, but we’re not much better at holding our politicians to account. Discounted Canadian oil is our own True North version of the “Big Lie” technique perfected by Trump. Even though the “discounted oil” idea is easily proved to be untrue, Canada's media has aggressively amplified this propaganda. A Google Trends search of “Oil + Discount” in Canadian news reveals between 40 and 100 news articles every day using these terms together over the past 90 days.
Alberta Premier Rachel Notley and Prime Minister Trudeau’s manipulation of the word “discount” to describe the price differential between heavy Canadian oils and lighter oil down south is Big Lie #1.
Premier Notley knows that different quality oils fetch different prices, but touts the so-called discount anyway to try to save her political skin. Jason Kenney, Alberta’s opposition leader, is even more outrageous in his “discounted oil” rhetoric, threatening to provoke a constitutional crisis or attack the charitable status of oilsands opponents. Federal Liberals, led by Trudeau and Finance Minister Morneau, are equally barefaced promoters of this propaganda. Shame on all of them. And shame on the Canadian media for regurgitating this snake oil in up to 100 stories a day.
Politicians exaggerate losses
But it doesn’t stop there. Big Lie #2 is the claim that Canada is losing $80 million a day because of the so-called oil price discount. The “$80 million a day” lie is the oil discount lie juiced up on steroids.
Where did this huge number come from?
It comes from Rachel Notley and it's built on quicksand. Notley’s source is a highly-criticized Scotiabank report claiming a $40 million per day loss from the phony oil discount. Scotiabank’s report has been discredited for relying on faulty assumptions, inaccurate calculations and good old-fashioned puffery. Yet hundreds of articles cite Notley’s claim without mentioning the source’s flaws — or even pointing out that she inexplicably doubled Scotiabank's $40 million calculation to $80 million. Not to be one-upped in Whopper World, Jason Kenney is now claiming a Trump-like $100 million a day in losses.
The “$80-$100 million a day” Big Lie is like Ohio claiming it is losing millions because Quaker Oats, the local company that produces Aunt Jemima, is selling millions of bottles of their flavoured corn-syrup, but not getting premium maple syrup prices.
But it doesn’t stop there.
Burger King doesn’t sell Triple Whoppers in the rest of Canada, but I’m starting to think they’re sold in Alberta and Ottawa outlets. Notley and Trudeau are not content to rely on two Big Lies, they have to add a third.
Recently Notley said, “Make no mistake, this price gap is a real and present danger to the Canadian economy." She contends the phony gap is due to a lack of pipeline capacity to move Alberta oil to markets. Trudeau, Morneau, Kenney and others are spewing similar fibs.
Their scheme is impressive: Use discount frenzy (#1) to allege an $80 million a day national economic crisis (#2) in order to demand support for the Trans Mountain pipeline as The Solution (#3).
Trans Mountain pipeline is no solution
Canadian discount boosters claim that the Trans Mountain pipeline is essential to access new markets in Asia to create competition. Competition, they argue, will drive up prices.
Sounds good in theory, but it ignores the extra processing and transportation costs of heavy oil. A new pipeline doesn’t make those costs go away, or get rid of the upcoming IMO 2020 sulphur standards, it just adds additional costs for oil tanker transport across the Pacific.
The boosters' claim that shipping to Asia will bump up prices also falls apart under scrutiny. If this claim were true then you’d think that oil companies would be elbowing each other out of the way to ship their current oilsands crude to Asia on the existing Trans Mountain pipeline (you know, the one that Trudeau just spent $4.5 billion of our tax dollars to buy).
The reality is that there is no backlog of oil waiting to be shipped to Asia. In fact, Trans Mountain frequently operates at less than full capacity and, despite a blip last month, Alberta producers shipped hardly any oil through it to Asia over the last few years.
There is no price premium in Asia. In fact, former CIBC Chief Economist Jeff Rubin concludes "heavy oil ... typically trade at more than US$8 a barrel less, not more, in Asian markets compared to the prices Gulf Coast refineries pay.” Canadian oil producers aren’t lining up because they don’t want to lose $8 a barrel by selling their oil in the Asian market.
Now I may not have a Ph.D. in economics, but it doesn’t take a genius to figure out that pumping more oil into an already depressed market won’t raise prices.
Give Notley, Kenney, Trudeau and Morneau credit for nesting three Big Lies on top of one another to exponentially multiply their impact. Even the Liar-in-Chief down south has trouble matching that.
Despite its erroneous factual basis, the Three Big Lies strategy is working. The Canadian media is amplifying Alberta’s claims and Trudeau has Ottawa ponying up $1.6 billion more of our hard-earned tax dollars to subsidize Big Oil in Alberta.
It’s amazing what a bit of provincial whining will get you in Canada.
Alberta’s bad policies to blame, not discount
The truth is Alberta has no one to blame but itself for the fix it is in. Generations of bad provincial policies dug Alberta into this hole, and now Notley and Kenney are using brinkmanship to force Trudeau to fast-track more bad policies to dig Alberta out.
While the discount frenzy idea metastasizes, what’s missing from most media coverage is the fact that the Alberta government has known for years that the lesser quality (and therefore lower price) of oilsands crude makes their industry vulnerable to boom and bust cycles.
The writing has been on the wall. It's been carved deep like a phone number to “call for a good time” etched into the door of the local truck stop urinal.
Sadly, successive Alberta governments ignored the warnings, and now want Canada to bail them out with further subsidies and climate unfriendly policies.
Unfortunately, the gap between the rhetoric and the reality isn’t unique to Albertan or Canadian politicians. It’s a global problem. Trudeau inspired the world at the Paris Climate talks in 2015 by claiming “Canada is back.” He’s good at promises and apologies, not so much at standing up to Big Oil. While in years past, that may have been merely annoying, now it’s life-threatening.
As the New Year approaches, the discount frenzy rhetoric is reaching a crescendo.
While the ubiquitous holiday “discount” ads are irritating, we can simply ignore them and spend Boxing Day hanging out with friends and family. Not so the discount oil propaganda. It’s not just annoying, it has real-world consequences.
Canadians can’t just ignore the three Big Lies. Widespread acceptance of this snake oil could have — is having — a dramatic impact on the future our children will inherit. It's not just rhetoric, the propaganda is actually driving government policy in Edmonton and Ottawa. Instead of phasing out fossil fuels, our politicians are cutting cheques to Big Oil and delaying important climate policies.
If Canadians can't get a grip on our politicians, then it’s no surprise the rest of the world keeps throwing gas on the fire. We have the responsibility as parents, as citizens, to stand up, speak out and to take a stand against this fraudulent fossil fuel frenzy.
I am pro-life — meaning that I support policies that promote the survival of the web of life and civilization as we know it. I dream of a world habitable by people and critters for many years to come.
So I feel compelled to take action.
I hope you do too. My daughter's, and your child's, life may depend on it.
As long as parties tightly control elected members, democracy is thwarted.
As you consider how to vote in British Columbia’s electoral reform referendum, don’t assume that either keeping the way we elect politicians in B.C., or changing it, will guarantee a more responsive government. Dec. 1, 2018, the day after ballots are due, should be the beginning of a wider conversation about how to make this province more democratic.
It starts with politicians being truly accountable to their constituents.
What most people are yearning for is not merely a fairer distribution of seats in our legislature. People want to feel that whoever they elect will stand up for them and defend their interests. Currently, my elected representative is supposed to act for me and my neighbours as laws are debated, since we can’t all show up every day in Ottawa or Victoria or at city hall to give a thumbs up or down to important decisions.
But as we all know, that seldom happens. Party interests generally override constituents’ interests, and party policy is largely decided by the party leader and his or her inner circle.
Between elections, citizens are left out of this process and subjected to partisan, “party first” rhetoric by elected leaders. While vigorous debate is part of a healthy democracy, the finger-pointing, personal attacks and “my team good, your team bad” nature of our politics is alienating voters.
Simply reshuffling the chairs won’t fix the problem if we leave in place numerous ways party leaders control their MLAs. These include party fundraising rules, the absence of independent staff on legislative committees, impossible recall thresholds, and the party leader’s role in nomination races. The most powerful weapon party leaders wield is called whipping.
It is extremely rare in this province for MLAs to vote independently from their party. That’s because they face punishment if they do. As former investigative journalist Sean Holman pointed out in his must-see documentary “Whipped,” the secretive party-discipline rules that “whip” votes along party lines have transformed Canadian politicians into “trained seals” following their leader.
One former MLA told me how his party changed his password to deny him access to the internal party member and donor database in the lead-up to an election as punishment for not towing the party line.
The controversy surrounding the recent leaked NDP “gag order” that would prevent NDP caucus members “from publicly criticizing the decisions of Premier John Horgan’s government” just codifies decades-old informal rules for most parties. The Green party claims not to whip votes, but the voting records of their three-person caucus are virtually identical. We’ll see if their “no-whipping” policy survives an expanded Green party caucus.
Whipping insures legislators stick within their parties rather than work across the aisle with other members to solve problems jointly. Might PR systems increase the likelihood of minority governments, forcing parties to work together? Yes. However, all proportional systems proposed in B.C.’s referendum have to top up the number of seats for parties under-represented in the direct vote. How these top-up seats are allocated has a dramatic impact on accountability. The top-up options will be determined by a legislative committee if the referendum passes.
Even if the legislative committee decides not to use party derived “closed” lists, parties can still influence the makeup of top-up lists. As a result, the dictator-like power our Westminster-system gives party leaders over MLAs will persist.
By policing internal challenges to their power, political parties paradoxically erode their authority. When pollsters ask Canadians to rank how much they trust various institutions — governments, industries, professions, charities, non-profits, religious organizations, universities, news organizations — political parties always come out at the bottom of the list.
Globally, people generally trust actual people more than institutions. Polls show young people trust younger people, older trust older, ethnic voters trust ethnic representatives. These trends hold in British Columbia.
It raises a question (perhaps to be decided by some future referendum): If we want to adjust seat counts to ensure they are proportional, perhaps we should recalculate around traits people actually care about — age, gender and ethnicity — not political party. After the Vancouver election resulted in all Asian candidates being defeated despite 45 per cent of the population being Asian, imagine a legislature that is proportionalized to reflect the real ratios of Asians, First Nations or women.
In the meantime, here are some other ways to change B.C.’s legislative process to make politicians more accountable to the people who elected them:
- Develop new rules to allow MLAs more free votes and limit whipping;
- Strengthen the role of constituency associations in choosing candidates and reduce the power of parties and their leaders to exclude candidates;
- Democratize power of MLAs to choose their caucus chairs;
- Empower caucus to review and remove the party leader, and elect interim leader;
- Codify rules for how MLAs can be expelled from and re-admitted to caucus;
- Increase the signature requirements on candidate’s applications — and require candidates to personally witness each signature — in order to force candidates to demonstrate wider local support before election; and
- Enhance resources and financial support for all MLAs, particularly independent MLAs.
Constituents’ ability to recall an unaccountable MLA must also be strengthened. While recalling an MLA should be a difficult task, as a last resort it must be attainable by co-ordinated volunteer effort. Recent reforms to improve disclosure and transparency requirements and ban union and corporate money in recall campaigns are advances. However, the $5,000 third party spending limit and the 60-day timeline make it a mountain too high.
This piece isn’t meant to cool anyone’s desire to cast a vote in the current referendum. Whichever choice wins, however, there is still a lot of work required to get the accountable MLAs and accountable government we need and deserve.
The backlash surrounding Dr. David Suzuki receiving an honorary doctorate from the University of Alberta is the best evidence yet that the petrostate stranglehold in Alberta is cracking.