The Trans Mountain Pipeline goes to the Supreme Court of Canada

Is Trudeau going to get that pipeline through British Columbia?

Everyone is aware of the issue of pipelines in Canada. ‘Environmentalism’ constitutes a politically attractive cover for parties who are really in the hostage-payment business (the victim pays for the ‘right’ to cross a particular geographical area). We know it’s just an old-fashioned shakedown in fancy constitutional clothing, because supposedly ‘fundamental’ rights invariably disappear when the appropriate cash payment is provided.

Economists call this rent-seeking. (Anne O. Krueger, The Political Economy of the Rent-Seeking Society, American Economic Review 64 no.3 (June 1974))

The Americans, in the beginning, were at risk of this form of balkanization because states, in the early years, were presuming the right to collect tolls against people and goods traversing their territory. New York, Ohio and Illinois didn’t then have the public relations savvy to say they were merely ‘protecting the environment’ – so unsophisticated. (Corfield v. Coryell (1823) 6 Fed Cas 546).

The striking down of such balkanizing barriers was in large part what made the United States into the one great seamless economy that it is today. Our founding fathers knew all of this and so wrote it into BNA Act (and into the Charter s.6). So it is with a smile that I describe the British Columbia Court of Appeal shutting down the green shakedown of the Trans Mountain Pipeline.

British Columbia formally entered the payday action with its Environmental Management Act saying, effectively: ‘yes we admit that Trans Mountain has been shipping ‘light’ oil through British Columbia for a long period. But ‘heavy’ oil, well that another thing altogether. That hurts the environment substantially more than light oil, doesn’t it.’

When Old Man River Dam was decided by the Supreme Court of Canada (in Canada’s favour against the province), because of the particularities, it did not stand out as a critical federal bulwark. Yet it was Old Man River which saves Trans Mountain now (at para 82-83).

Long story short:

The BC Court of Appeal struck down the province’s environmental legislation as it applied to a federal work or undertaking. BC said: even though it’s a federal work, we can still apply our laws of general application. BC was on solid ground, citing numerous SCC cases to the same effect. The BC Court of Appeal found that this legislation was specifically aimed at the Trans Mountain Pipeline (in other words it was not general application legislation which incidentally affected a federal work.

The environmental crowd calls this case a ‘loss’. Ignoring Canada’s gross domestic product, or more subtly, pretending that we’ll all work in new green pixy-dust factories when the oil stops flowing, no one dares label this affair as a rent-seeking exercise.

Economists like to have their fun too.

So herein below is the Statistics Canada (2010) input-output data showing Canada’s oil and gas industry in column 5.  It is approximately the third largest industry in the country. It accounts for $113 billion in GDP. No big deal says the ‘Environment’, all that GDP will get absorbed in other sectors.

Really? I’ve included Canada’s total wholesale and retail trade in column 60 and 61. Those are the biggest industries in Canada. They are each barely larger than oil and gas.

What’s the takeaway?

Every MacDonald’s, corner store, gas station, car dealer and supermarket barely constitutes $130 billion in output. How is it that all the displaced oil and gas industry will get to work there?

When and if environmentalism shuts down Alberta and Saskatchewan by an SCC decision effectively destroying this industry, Canada will finally get its policy-driven recession that we have been trying for – for so long.

Input-output for dummies

The columns are part of Statistics Canada’s 200 industry table which governments across the country use to evaluate policy decisions and impacts. column 5 (oil and gas) makes $113 billion of expenditures annually (2010) . Those expenditures are made buying inputs from each of the businesses in column 1. For instance, oil and gas spends $14,288,000 buying from the forestry and logging sector (row 2). The oil and gas sector spends $9.8 billion on wages and salaries, about 33% of all the wages and salaries of all the banks, insurance, real estate and management companies in Canada ($31,871,577,000).

The point is:

Canada’s economy, having taken a Keynesian-size SCC body-blow, will not be able to ‘absorb’ the displaced oil and gas workers and even that absorption will not replace the $113B in output. Green factories won’t do it either.

What say you SCC?