Should our governments be bailing out oil and gas corporations or redirecting billions in taxpayer handouts toward medical care, housing and income support?
Amid the growing COVID-19 global pandemic, should Canadians be reassessing public subsidies for bitumen pipeline and LNG projects and corporations?
The economics for both the Trans Mountain Pipeline Expansion (TMX) and LNG Canada/Coastal GasLink (CGL) were already severely strained prior to this crisis taking hold, with bitumen prices falling below $40/bbl in October and the Asian LNG benchmark sinking lower than $4/MMBtu in January (about a third the break-even point for this resource). Both projects only exist today due to the tens of billions of dollars in public buyouts/subsidies from federal and provincial governments.
Now, the prospects of these industries are even bleaker – on March 19, the price for Canadian bitumen fell as far as an unprecedented $5/bbl – leaving taxpayers with an even bigger burden to keep the projects on life support going forward. These rock-bottom prices are driven in part by a global supply glut which will likely remain well into the future. And yet, the latest discussion from Ottawa is of a multi-billion-dollar bailout for the oil and gas industry. In this critical period, when extraordinary public stimulus is required for emergency medical services, housing and income support, and other broader economic requirements, is it time for BC Premier John Horgan and Prime Minister Justin Trudeau to withdraw public support for these projects?
As we emerge from this crisis into a new world, we are compelled to question and reevaluate how we shape our economy and society – and public subsidies for fossil fuels must be part of that conversation.