Canada's largest oil industry group calls for end to 'politicization' of Alberta-B.C. trade war

The head of Canada's largest oil industry group does not supporta proposal by Alberta United Conservative Party Leader Jason Kenney tocut off oil shipments to British Columbiain retaliation for the province's planned restrictions on new bitumen imports from Alberta.

Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers, said further politicization of the Alberta-B.C. energy trade will only do damage to the industry.

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"We want to see the politicization mellowed on all sides," McMillan told CBC News on Wednesday.

"Any time that trade issues get ramped up and there's a politicization of them, people get injured, businesses get injured. Our hope is that the elected leaders can find a path through this."

The CAPP president was responding to statements Kenney made to a Vancouver radio station on Friday, in which the UCP leader proposed cutting offoil exports to B.C.'s Lower Mainland, and restricting B.C.'s natural gas exports through Alberta to U.S. markets.

"B.C. gets huge revenues from gas that's produced in the northeast that's shipped through Alberta toll-free," Kenney told radio station CKNW.

"Why would we let the B.C. government benefit from that if you're blocking Alberta energy products? One of the things we could consider, if the British Columbia government really gets in the way of Canadian free trade and Canada's prosperity, would be restricting the shipment of oil to Burnaby as it is."

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Burnaby is the terminus of the Trans Mountain pipeline and is also where the majority of fuel consumed in B.C. is refined and distributed.

Cutting off oil shipments on the contentious pipeline would drive up gasoline prices province-wide and likely lead to an increase in oil tankers deliveringcrude to the B.C. coast.

No business support for boycott

The petroleum industry's position was echoed Wednesday by Edmonton Chamber of Commerce president and CEO Janet Riopel.

Both groups saidadding new trade barriers between the two provinces would be akin to kicking Alberta's prime industry while it'sdown.

"These bans are going to further impact business in an already tough, challenging economic environment," Riopel said.

"Our climate has not been easy for how longthree yearsmore than that? And now we're just further making this problem more difficult for business, more challenging for us to be able to actually get our people, products and services to the markets that want them and need them. So no, we do not support this boycotting or banning."

'Losing investment to Iran'

McMillancalled B.C.'s threat to delay the Trans Mountainexpansion for another round of environmental riskassessments"irresponsible" and damaging to Canada's international reputation.

He cited the recent cancellations of major energy projects, such as the Northern Gateway and Energy East pipelines, and several liquefied natural gas projects on the B.C. coast, as evidence of adecline in investor confidence.

"We're getting a reputation around the world as a country that can't get things done," McMillan said. "We're losing investment to Iran, and that's hard for Canadato hear."

Reputationalrisk aside, the real-dollar differential between the price of Canadian oil versus global benchmarks has grown in recent days, reaching a discount of half price for Canadian crude.

Much of that differential can be attributed to Canadian pipeline bottlenecks and the resurgence of the shale oil industry in Canada's biggest consumer-turned-competitor, the United States.

"If you take the differential away and put the tax [revenues] on it, you could build a school every three weeks or something in Canada," McMillan said. "It's phenomenal the value disruption.

"It's not just Alberta. It's all of Canada that's losing out."

'Unconstitutional'

The petroleum producers' group and the Edmonton business chamber were united in calling on the federal government to step in and end the trade war that this week pitted barrels of Alberta oil against bottles of B.C. wine.

• Alberta government boycotts B.C. wine

"British Columbia doesn't have a role here," McMillan said. "This is a federally regulated pipeline that, as unfortunate and irresponsible as the statements made by the B.C. government last week [are], it's clearly the federal government that has responsibility for the safety and oversight."

Riopel called B.C.'s move to delay new oil shipments to the province "unconstitutional," and said it's now up to Alberta and its chief industry to lean on Ottawa to live up to its role as the federal regulator of cross-border pipelines.

"If the federal government isn't going to defend this project, somebody has to," Riopel said. "And we're pleased to see the government of Alberta and all of business is supporting this."

todd.coyne@cbc.ca

@toddcoyne