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Little truth to Higgs’ claims that federal energy policy is driving inflation: experts

Click to play video: 'Blames on federal energy policies for inflation spike flawed: experts' Blames on federal energy policies for inflation spike flawed: experts
WATCH: In recent weeks, Premier Blaine Higgs has increasingly blamed federal energy policies for the frightening rates of inflation seen in the province and across the country. But according to some experts, there's little validity to his claims. Silas Brown explains – Jun 3, 2022

As energy prices, inflation and their impact on the cost of living have dominated question period inside New Brunswick’s legislative assembly, Premier Blaine Higgs has made no secret of who he believes is responsible.

Over the past several weeks, Higgs has made frequent references to the federal government and, in particular, federal energy policies as being the primary culprit for record fuel prices.

“Mr. Speaker the issue here around the whole gas thing is as a province we can’t chase this, we’re not big enough to chase energy, world energy prices — world energy prices that are in the state they’re in primarily from a flawed federal program that’s killing this country. That’s where we are, coupled with the Ukrainian crisis,” Higgs said Thursday.

“[This] is exactly what the Liberal government planned on with their whole carbon plan. Getting Green and shutting the lights out. I guess you could call this extreme green, Mr. Speaker, because people aren’t going to be able to afford to live in this environment.”
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Read more: N.B. announces $20M for low-income residents as inflation rises across Canada

But according Herb Emery, the Vaughn Chair in Regional Economics at the University of New Brunswick, federal policy has little to do with the pace of inflation over the last few months.

“I don’t think there’s any real truth to the current inflationary crisis being related to the federal government’s — I don’t know the right word to use — but federal government’s lack of support for the energy sector,” Emery said.

“Whether we built the three pipelines, or whatever Alberta was asking for, and we were producing more oil, it wouldn’t make a difference in Canada because we’re too small internationally to provide enough oil to actually bring the price down. That would be Saudi Arabia and OPEC.”

Emery said Higgs does have an argument that an eastern flowing pipeline may have helped alleviate European reliance on Russian oil, but that has little impact on the domestic inflation rate which is being driven by a mix of the war in Ukraine, superheated consumer demand due to COVID-related supply chain issues, and the red hot Canadian housing market.

But those complex, opaque forces don’t fit tidily into political messaging or make for engaging question period topics, making it much easier to point fingers at Ottawa.

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“It’s very difficult to explain to voters the root cause of why costs are rising, why prices are going up, what’s happening with the cost of living,” said Jamie Gillies, a professor of communications and public policy at St. Thomas University.

“I think it’s a default for provincial politicians to blame the higher level of government and I think that’s what Higgs is doing here.”

According to Gillies, Higgs is likely looking to deflect some of the pressure that his government is under as New Brunswickers continue to feel the pinch of the rising cost of living.

“At the end of the day provincial governments tend to wear things close to home,” Gillies said.

“Like rising prices, like things happening in your home that affect your livelihood.”

Read more: Climbing checkout costs are pushing more New Brunswickers to food banks

In some respects, it’s unfair that governments are being blamed for something that they have very little control over.

“Politicians federally, provincially and locally, they’re all going to bear the burden of the political backlash and public outcry over price inflation and they’re really powerless to do anything about it,” Emery said.

But even carbon pricing itself has little to do with current energy prices. Right now, the carbon tax adds about 11 cents per litre of gasoline sold in New Brunswick. While Higgs is right that part of the logic of the federal policy is to make fuel more expensive, it’s unlikely to stay at current levels long term.

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Emery said that the price of gas is being driven by global crude prices, which he expects to fall eventually, and that it will take about 10 years for the carbon tax to drive prices back to where they are now.

But for now, politicians of all stripes are left scrambling with how to respond. This week, the Higgs government announced $20 million in targeted relief to social assistance recipients in the form of a one-time payment.

For the official opposition, that wasn’t enough, with interim Liberal leader Roger Melanson calling on the premier to do more for the working poor who won’t receive anything from the program.

“They can’t afford the gas to go to work … or they can’t afford their groceries,” Melanson said.

“Help them out premier. Will you at least think about it?”

Higgs responded: “You know, Mr. Speaker, you know who is hiding from these conversations? The prime minister of Canada.”

Correction: A pervious version of this story incorrectly said carbon pricing currently adds 14 cents per litre of gasoline sold in New Brunswick. The actual figure is 11 cents. 

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