Don’t Compare Oshawa GM to Alberta Pipelines

Three days ago Linda Mcquaig wrote an article in the Toronto Star saying:

Trudeau should consider buying GM and making electric cars

…Yet, oddly, Prime Minister Justin Trudeau showed no such careful consideration when he promptly jumped in with 4.5 billion taxpayer dollars to purchase the leaky, 65-year-old Trans Mountain pipeline last spring, declaring it “in the national interest” to ensure the pipeline’s expansion after the corporate owner threatened to back out of the project.

And taxpayers could be on the hook for another $9.3 billion if Ottawa ends up financing that expansion — which would enable Alberta to triple production of its heavy oil, delivering a devastating blow to the battle against climate change.

Meanwhile, Trudeau has shrugged and shown no interest in using taxpayer dollars to create a Canadian-owned automaker. SOURCE

which is just willful ignorance.  Here is what is wrong with those statements:

1. The Trans Mountain Pipeline will be sold back to its rightful place in the private sector, likely within 18 months.  The proposal from the Toronto Star would be the Canadian tax payer permanently owning a highly questionable manufacturing business
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2. Cars and pipelines are an apples and oranges paint comparison.  A pipeline is an infrastructure project.  Today it moves oil in one direction.  Tomorrow if can move water in the other direction.  The next day it can move hydrogen.  Cars are a consumer good
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3. The Trans Mountain pipeline was / is instantly profitable to the Canadian taxpayer. Developing, producing and marketing a new generation of electric vehicles in a factory that was last upgraded a decade ago, would cost tens of billions and, if the history of government manufacturing is any guide to the future, likely fail
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4. There are 3000 jobs at stake in Oshawa but tens of thousands of jobs at stake in Saskatchewan, Alberta and BC which creates alot of transfer payment dollars.   The Toronto Star reported that the Trans Mountain Pipeline will result in “… 800,000 direct, indirect and “induced person-YEARS” of employment over 20 years…”
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5. If the Oshawa GM plant were to stay open, the plant would need to be refitted again and there would be even fewer jobs.  If the Trans Mountain Pipeline is a success (and it will be), it will be further expanded in the future and create more jobs
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6. The Trans Mountain Pipeline is not leaky and the Trudeau liberals did not invest our tax dollars into an old line.  WE purchased the engineering, plans, and rights to a new pipeline that makes the most sense next to the existing line
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7. Canada is a ‘price taker’ not a ‘price maker’ for oil and gas so our production does not increase or decrease the price and therefore does not influence the consumption, which is the issue.  The inference from the TorStar article is that somehow the addition of Western Canadian oil and gas will result in increased consumption “…delivering a devastating blow to the battle against climate change.”  Oil and Natural Gas are global commodities and the demand for them will be met by the lowest cost producer.  That typically means nasty places like Russia (now the #3 global producer), Nigeria and Venezuela with horrific (not exaggerating) environmental records.  For the facts, read our article Why ‘Keep It In The Ground’ Is a Formula For Environmental Disaster
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8. Even electric cars are consumers of energy, which is the problem alluded to in the article, but where is that energy coming from.  The most likely source for ‘green energy’ in the near future comes from Western Canada’s natural gas.  WE are shutting down coal fired plants and enabling Natural Gas fired plants Canada wide but WE still need electricity to come from somewhere.  I have solar panels on my roof, but most don’t.  Solar and wind will be able to satisfy most of our energy needs in the mid to long term, but not today.  We just can’t build them fast enough.  So we need Western Canada’s natural gas as the infill technology for the next 25+ years, which makes pipelines a public good for all Canadians.  Cars… not so much.
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9. Government should only take control of businesses that the private sector cannot or should not manage.  Governments role is not to nationalize business.  The role of Government is to create a level environment for business ad citizens to flourish
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10. The Trans Mountain pipeline expansion NEEDED Government intervention because it was the largest symbol yet of Canada’s inability to build large scale projects and was (and is still) causing massive capital flight.  This was and is affecting every single Canadian today in small ways and WE will really feel it in the next few years as new factories, technologies and the jobs that go with them are not built in Canada… unless we can prove to investors (including Canadians) that Canada is a good place to think big and get things done.
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Beyond all of those facts the article says the Government should produce ‘clean electric cars’, but that would take many years to design, engineer and test so in the interim, the best thing GM workers in Oshawa could hope for is that they produce existing cars on contract like Magna is considering

Pitting Alberta against Oshawa is not productive.  The two issues are as different as skiing and Chinese food so we should expect more responsible, considered reporting from a major publication like the Toronto Star.

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For the record, I love GM and Oshawa.  I grew up in Trenton Ontario, about an hour away from the plant, and have bought more GM’s than any other brand in my life.  Further, I will go out on a limb and say that I think it is likely (i.e. >50% not 99%) that someone will continue to produce auto’s at the Oshawa plant.  Today I drive a Cadillac ELR which was built in one of the GM factories that is closing.  (Yes, that is the very first electric Caddy and it is awesome).