The Alberta government’s pursuit of oil transport by rail to reduce a supply glut is not a realistic solution; instead, it shows the province is grasping at straws, said Conservative leader Andrew Scheer.
In an interview with the West Block‘s Mercedes Stephenson, Scheer said that while he understands why the province feels it has no other options to address the immediate problem of lack of access to international markets, rail cars will not help.
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“We have the province of Alberta talking about things like purchasing rail cars. That’s not going to solve the problem,” Scheer said.
“I understand where the government of Alberta is coming from. The situation in Alberta is very, very dire so it’s natural that you have a provincial government that’s looking for literally any solution that might improve the capacity issue. But it’s not a long-term solution.”
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The only viable answer, he added, is more pipelines.
Alberta Premier Rachel Notley announced recently that the province will cut oil production with the hope of reducing the glut of supply.
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That extra supply, combined with a lack of transport options to get the oil to the coast — where it can be shipped to international markets — means the province is captive to selling its oil for whatever American purchasers are willing to pay.
As a result, Western crude has been selling at a significant discount compared to American oil for the last several years.
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The oil price differential means Alberta is getting roughly $80 million less per day than it would if Western crude was selling at international prices.
Scheer and the Conservatives have been fierce critics of Prime Minister Justin Trudeau‘s handling of the energy sector’s challenges.
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But Scheer would not say whether he believes a bailout — akin to what the auto industry got in 2008 and 2009 — should be on the table.
“What is necessary in the energy sector is the confidence that big projects can get built. The reason why we’re talking today as policymakers about purchasing pipelines or rail cars or production limits is because there is no confidence. Investors are pulling out,” he said.
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“If you had a government that said: ‘Here’s the framework, here’s the steps we’re going to take today to start getting these projects built,’ that confidence would return.”
The question of how best to support Alberta’s struggling energy sector dominated federal-provincial talks at the first ministers meeting on Dec. 7 and 8.
It also was a key focus for the federal-provincial finance ministers meeting that happened on Dec. 9.
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In the week since, though, another major challenge has emerged: how to deal with China’s apparent response to the RCMP’s arrest of Meng Wanzhou, CFO of Huawei, the Chinese technology company run by a former People’s Liberation Army engineer and counted among the crown jewels of Chinese industry.
Meng was arrested in Vancouver at the behest of American authorities, who allege the company she helps run used a subsidiary to skirt U.S. sanctions on Iran.
The Huawei CFO has denied the allegation but faces possible extradition to the U.S.
Scheer last week accused Trudeau of leaving Canada without leverage to pursue the release of two Canadians detained in China, describing the prime minister’s response as a “naive” approach to a “policy of appeasement” with China.
He did not offer concrete details on what he would do differently but told Global News his approach would be more “cautious.”
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