Today's discussion:

The Trans Mountain pipeline was worth every penny of its $34 billion price tag

First, taxpayers are not on the hook in the way that most people think. Indeed, we may not lose any money on the purchase at all. Second, and more importantly, the pipeline’s economic benefits to Canada far surpass its cost. The Bank of Canada predicts a 0.25 percentage point increase in second-quarter growth from the new pipeline. That is no small move for a nearly $3 trillion economy.

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Kim Morton

Is the pipeline necessary? A big YES. Should the government have taken it over? Probably not. Basic government incompetence put us in the position of having to finance a project that cost about three times what it should have. Perhaps ten times what it should have, if built when first proposed. Various government agencies caused a permitting delay that was longer than the design and construction of the first line. The lawsuits that were about to happen, along with the erosion of trust in Canada’s government, put them in the position of having to choose the least expensive and most politically expedient option.

30th April 2024 at 8:45 am
Lauraine

This success was a joint effort by Premier Notely and PM Trudeau, see what cooperation can do for everyone in this country.

30th April 2024 at 12:10 pm
RJKWells

No, Professor Tombe, you’ve got it all wrong. The Trans Mountain Pipeline expansion will serve as a monument on the futility of governments choosing to inject themselves into projects better left to the private sector.

Of course, the hand of the Liberal Government was forced into keeping this vital infrastructure project alive by purchasing it for 4.7 billion dollars when Kinder Morgan, acting in the best interest of shareholders (investors), decided to walk away after enduring years of endless regulatory red tape and delays brought on by numerous legal hurtles and Ottawa’s onerous review process.

Ottawa, on the other hand, did not act in the best interests of their shareholders (taxpayers), spending far more than what Kinder Morgan would have spent to complete this expansion project. Oil would have been flowing to foreign markets years ago, with Ottawa being among the beneficiaries of the revenues it generated far sooner, had they simply chosen to get out of the way.

It will take decades to recoup the 34 billion dollars that Ottawa ultimately sunk into this project – that is, if they don’t end up selling it at a fire sale loss to some group they choose to get it off their hands. My guess is that they will buy high and sell low, proving, once again, that governments can’t manage things any better than they can build things.

30th April 2024 at 8:29 am
Lauraine

Trevor makes his case very well, and now with new Asian customers and a lower discount per barrel than what the Americans charged us, the dollars kept in Canada are going to be more valuable from the moment the taps are turned on.

30th April 2024 at 12:08 pm
RJKWells

Those customers – Asian or otherwise – were always there, lined up to purchase our energy products long ago, some rebuffed by a Prime Minister who once had the temerity to say the business case had not been made.

Lauraine, the cost to Canadians – in this, our lost decade – of putting of shovels in ground and having this project built were enormous, far more than had we allowed Kinder Morgan to get the job done in the first place. The energy royalties, whether passing through a pipeline bankrolled by a private enterprise or by a Crown Corporation backed by tax dollars, would still be flowing our way. The difference is that we’re now starting from one rather big hole as we seek to recoup the $34B (take a moment to allow that number to sink in) that Ottawa spent on this project on our behalf.

I’m not at all optimistic that they will do that.

30th April 2024 at 12:58 pm
PH

Will the huge subsidies for the automotive companies that were recently announced by the Ontario and Federal Governments have the same type of overwhelming benefit as the Trans Mountain Pipeline. It would be very interesting to hear the Professor’s thoughts on this.

30th April 2024 at 8:09 am
Peter Menzies

Glad it’s done – it only took 11 years, which is probably record time for a project in Canada and boy I’d like to know how it manage to cost that much. But I think we know. To whom will the government now give it?

30th April 2024 at 9:10 am
Peter Morgan

As a bet against the greening of energy production, it is a great project. It explains clearly how the Liberals could declare a climate emergency one week and then approve the pipeline the next week.

30th April 2024 at 7:16 am
Mark S

We should be looking at the costs, benefits, time and viability to build a further pipeline along the existing Trans Mountain Pipelines before we lose the expertise and consent that was expensively acquired with the building of the existing pipeline. Too often projects in Canada follow a boom/bust cycle that result in greater costs and delay.

30th April 2024 at 12:13 pm
Kevin Scott

Thank you Professor. Getting 1300 tankers off the rail lines running through the center of every Western Canadian city is a good thing. It was a boondoggle but I appreciate the insight on how it could still work in spite of the cluster F of the last 11 years. I just hope Trudeau does not give it away to the FNs.

30th April 2024 at 11:47 am
Steven Rivette

I am not one to think that because the scam could potentially payback the costs of the scam that being scammed by two government bodies is somehow a good thing. On the contrary what took place is of deep concern and calls for full disclosure and a Forensic Audit to the public purse. A lot of money was made!!!! That word billion drools into trillions and both words are being used to neuter this country from international responsibility let alone a responsibility to ourselves to measure up at least to our Anthem.

30th April 2024 at 8:19 am
Ian Gray

Great news. Now time for the emissions cap.

30th April 2024 at 6:28 pm
Ernest

The astronomical increase in both time delay and cost needs to be investigated as to their validity. The process currently in vogue is “when in doubt, follow the money”. I agree that an audit would be appropriate but not if it will follow the usual Canadian route of costing the taxpayers another fortune and eventually being quietly filed under “dust materiel” in the Parliamentary Library. We know the Purchase Cost. What necessitated the other +/- $25B expenditure?

30th April 2024 at 1:36 pm
Michael B

If I understand correctly, the overwhelming majority of our oil exports go to the US.
The proposed Keystone XL pipeline from Alberta to Texas was suspended when Biden revoked its presidential permit in Jan, 2021. This pipeline expansion would have increased our export capacity by 830 Mb/d.
The latest Trans Mountain pipeline is projected to increase the current capacity of 300 Mb/d by 590 Mb/d for a total of 890 Mb/d. This will all be shipped by tankers along the US west coast.
If a future US administration decides to reinstate the presidential permit for Keystone XL and it’s eventually completed will our western oil industry have the extraction capacity to fill both pipelines ? I don’t see this happening with the current gov’t’s philosophy of “phasing out” fossil fuels through restrictive policies.
It seems to me that if Keystone XL goes ahead it would compete for supplies against Trans Mountain, which would change the author’s financial calculations significantly.

30th April 2024 at 10:25 am
Ernest

If Trump is elected Keystone will be greenlighted within 30 days of Swearing-in Ceremony. You raise a good query but I don’t see why the skepticism at this stage. If Canada has the will; we are as effective as the Americans in finding a way to rise to challenges. What you say is certainly possible but I think that both pipelines can be satisfied. Someone elsewhere here mentioned building a parallel Transmountain so, if there is enough oil/gas to validate that suggestion then available quantity would not be an issue. Maybe a spinoff to feed-into Keystone might prove to be the feasible answer. I have to trust you experts on what is possible and feasible. I just hope that eventually it will be a win-win for all of Canada. It certainly should be. Besides; you never know, in the “lessons learned” phase, maybe when these pipelines become a successful reality down the road, Quebec will rethink its indefensible resistance and allow a pipeline to flow from the East to the West! We live in hope; but history would appear that we will continue to be politically hoodwinked and eventually die disappointed!

30th April 2024 at 1:25 pm