Varcoe: Amid talk of an ‘economic blockade,’ Notley has few good weapons against B.C.

Alberta can hold its breath, stamp its feet and get red in the face.

But can Alberta do anything — other than get angry — about British Columbia’s attempt to block more diluted bitumen from crossing the Rocky Mountains?

As Alberta’s cabinet held an emergency meeting Wednesday to ponder that very question, experts said they believe Premier Rachel Notley has few options — and even fewer good ones — to retaliate.

Suggestions of ramping up a political campaign, going to court, halting the expansion of interprovincial electricity trade or stopping oil headed into the lower B.C. mainland are all at Alberta’s disposal.

But, they add, any significant step could hurt Alberta and would risk escalating a brawl between two NDP governments with a profoundly different world view on oil pipelines.

Either way it shakes out, a rocky road lies ahead after the government of John Horgan announced Tuesday it will consider regulations to restrict additional diluted bitumen oil moving into B.C. by pipeline or rail as it seeks to stop the Trans Mountain pipeline expansion from being built.

“Basically they are talking about an economic blockade of Alberta and Alberta producers,” said Mike Percy, a chief of staff to former premier Jim Prentice and a one-time Liberal MLA.

“It’s not clear to me what tools (the Alberta government) has that do not have a significant blowback to businesses in Alberta. Once you get into the game of tit for tat, there are losers.”

As the sudden meeting of cabinet demonstrated, the Alberta government is now assessing its next steps.

Notley told reporters at the legislature that B.C. took direct aim at Alberta and “there need to be consequences.”

The premier said her cabinet would discuss “a range of economic and legal options available to us, including for example, interprovincial trade in electricity.”

Whatever it does, however, it won’t be simple.

“I’m struggling to find an action that wouldn’t, in fact, backfire and cause more harm,” said University of Alberta School of Business dean Joseph Doucet.

One person close to the discussions, who spoke on condition of anonymity, said Alberta has examined its alternatives for over a year, consulting with trade experts, lawyers and energy officials on what to do if B.C. tries to block Trans Mountain from being built.

The pipeline, which would triple the amount of oil moving to the B.C. coast, has federal approval and is considered essential for Alberta. It would improve the price for producers and the amount of royalties paid to the province.

One option that has been suggested is slowing down or putting a toll on B.C. natural gas from entering Alberta’s pipeline system to then move east. However, Alberta-based petroleum producers and pipeline operators would be affected and likely to strongly oppose such a step.

Likewise, the biggest weapon would be any attempt to restrict the amount of Alberta oil heading to the Burnaby refinery, effectively limiting the amount of diesel, jet fuel and gasoline available to B.C., forcing them to go to Washington state suppliers and pushing up pump prices.

“The most compelling possibility would be periodically to withhold permits for the shipment of Alberta crude through the current Kinder Morgan pipeline, which fuels much of the B.C. economy,” UCP Leader Jason Kenney said Wednesday.

“Let B.C. consumers see what sky-high gas prices look like.”

But that would also come with heavy costs for both industry and consumers, and could break interprovincial trade agreements.

A more realistic measure, experts said, would be to halt discussions with B.C. about expanding the electrical intertie transmission lines running between the two provinces.

The government in Victoria is in the midst of building the controversial $10.7-billion Site C dam in the province’s northeast near Fort St. John and has previously talked about exporting excess power to Alberta.

B.C. would benefit from a larger line that would allow it to move more power east. Notley could adopt a go-slow approach, “certainly something where Alberta doesn’t really have a downside,” said the source.

“We simply wouldn’t build something to make B.C. Hydro exports into Alberta go better.”

But as the recent trade scrap with Saskatchewan over licence plates proved, any step that is offside of the New West Partnership or Canadian Free Trade Agreement would have implications.

It’s unlikely Alberta would do anything to violate these deals, particularly if it intends to use their trade-dispute mechanisms at any point.

“They are stuck in a tough place because they were just in a spat with Saskatchewan, saying they wanted open borders,” said University of Alberta political scientist Jared Wesley.

“It would be difficult to take retaliatory measures without sounding a bit hypocritical.”

One step that would be less aggressive, but possibly more effective, could see Alberta ramp up a public relations campaign next door to promote the benefits of Trans Mountain.

“If you want to talk to British Columbians and try to engage them more directly in this conversation, that would be a big signal,” said Marcella Munro, a senior strategist with KTG Public Affairs in Calgary and a former chief of staff to Alberta Energy Minister Marg McCuaig-Boyd.

“Most provincial governments don’t go into each other’s jurisdiction to do that kind of thing.”

Another option would be to legally challenge the B.C. proposal if it actually becomes a regulation, on the grounds it is unconstitutional. But a court case could take years to resolve.

The best solution would be to pressure Ottawa to make a clear statement that it won’t allow any proposal to block oil shipments to stand, Percy said.

“The bottom line from my perspective: Where the hell is the federal government?” he asked.

“It should actually be viewed as a crisis by the federal government — because in the absence of federal government action, it basically casts into question what kind of country we are.”

Chris Varcoe is a Calgary Herald columnist.

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