Pumping more Canadian oil is an election promise made by both the front runners in the current federal election, with Liberal leader Mark Carney and Conservative Pierre Poilievre promising faster project approvals, and teasing the return of the Energy East pipeline project.
But it won't happen, at least not without billions of dollars in government spending, and it shouldn't happen, for both economic and environmental reasons.
Energy East was a planned pipeline that would have run from Alberta all the way to St. John, New Brunswick, pumping more than a million barrels of crude a day. It would have stretched 4,600 km, the majority of that converted from existing natural gas pipelines. The total cost was projected at $15.7 billion.
The project's corporate backers announced Energy East in 2013, but by 2017, facing a federal environmental review and lower oil prices, they scrapped it.
Could Energy East be built today, with government cheering instead of fretting about CO2 emissions? Yes.
Should it be built? No. Absolutely not.
First of all, it's not going to cost $15.7 billion, or even $20 billion. If it's revived, look at the first cost estimates, and double them.
The total cost of the Trans Mountain expansion was estimated at $6.8 billion. When it was completed last year it had cost $34 billion, and it only required 980 km of pipeline. If you think Energy East, more than four times as long, could be built for less, well鈥� it must be nice to be such an optimist.
Remember, that was taxpayer money, because original pipeline owner Kinder Morgan backed out, and Ottawa took over. You paid for that pipeline.
But at least it's making tons of money, right?
Well, about that.
Recently released documents showed the pipeline has downgraded the amount of oil it plans to ship over the next three years, that its spot shipment capacity is underutilized, and that high shipping prices are keeping customers away.
A revived Energy East would likely suffer from similar problems: high construction costs leading to high transport costs, or a status as a perpetual money-losing project.
And who are we going to sell all this oil to, anyway?
Europe's oil demand is in long-term structural decline, as industry shifts to clean power sources and more EVs hit the roads. Some estimates show that by 2050, demand will be 80 per cent below 2019 levels.
While other regions won't see declines quite as rapid, we can't expect a big, growing demand for Canadian crude, especially not the heavy, hard-to-refine oil pumped in Alberta. How many cheap Chinese EVs and solar panels do you think will be in use across Asia and Africa by 2030, 2040, 2050? How many fewer gas-burning trucks and cars will be on the road, how many fewer power plants will burn oil?
Major pipeline projects are white elephants in the making. As solar, wind, battery storage, and EV technology all get better 鈥� remember how computers got smaller and cheaper from 1980 to 2020? 鈥� oil is simply going to be out competed, even if we didn't have to give it up to save our planet.
