Hypocrisy, thy name is Jason Kenney

The ultimate Kenney hypocrisy: Saudi investor could receive $600 million to $1.2 billion of Alberta government grants

Jason Kenney is courting Saudi Arabia for a $5 billion to $10 billion investment in a petrochemical plant, as reported by Emma Graney in the Globe and Mail on Friday. These are the same Saudis Kenney has excoriated for a decade as part of the “ethical oil” defence of Alberta oil sands. But isn’t it hypocritical to compare Saudi oil to African “blood diamonds,” then welcome with open arms the money earned from selling that supposedly unethical oil?

Of course it is, but what’s interesting is just how hypocritical, because if the investment happens, Albertans could be cutting a giant cheque to the Saudi company.

Before we explore the depth of Kenney’s hypocrisy, let’s state for the record that more Alberta petrochemical production is a good thing. In May, I wrote the Energi Hydrocarbon Vision, arguing that Canada has to adopt a post-combustion strategy for oil and gas. In practical terms, this means using hydrocarbons to make carbon fibre (oil sans bitumen) and petrochemicals (natural gas) instead of gasoline, diesel, and jet fuel. Turning natural gas into clean-burning hydrogen and sequestering the CO2 underground is also part of the vision. 

While more petrochemical production is a smart move, the problem here is Kenney’s decade of “ethical oil” politics. 

Ethical Oil was coined by Ezra Levant – the unethical muckraker and founder of Rebel Media – in his book of the same name.  Levant’s argument is that Western environmentalists and media criticize the oil sands but ignore the human rights abuses of countries like Saudi Arabia, Russia, and Venezuela. 

The whole point of Ethical Oil is to provide cover for the environmental problems with Canadian oil and gas – the sky-high greenhouse gas emissions of the oil sands and the 37 ponds containing 1.4 trillion litres of toxic tailings, for example. “We may be bad but those guys are worse” is a poor defence of an industry that desperately needs to clean up its act. 

Nevertheless, Kenney raved about Levant’s book when it came out in 2010 and he has been pumping the Ethical Oil narrative for all it’s worth ever since. The Premier is a prolific tweeter, search his Twitter timeline for dozens of examples.

But here are two instances of the ridiculous lengths Kenney’s government has gone to promote the Ethical Oil narrative. 

Tyranny index

The energy war room spends millions creating propaganda like this while the rest of the world is preparing for peak oil demand and the likely decline of global oil consumption beginning in the late 2020s or early 2030s.

Everyone knows about the waste of $30 million a year known as the Alberta energy war room, a.ka. the Canadian Energy Centre. This past spring, the war room published the cartoonish “tyranny index” by former Fraser Institute researcher and notorious right-wing activist Mark Milke and his fellow traveller Lennie Kaplan.

The basic point of this fatuous exercise was to show that oil and gas production from “tyrannies” like Saudi Arabia made up a higher percentage of global supply now than free countries like Canada – despite the fact that crude oil sells on grade and price, not ethics. 

Milke promoted the tyranny index on Alberta media, but the project was ridiculed on social media and, it appears, quietly kicked to the curb.

Sometimes, Ethical Oil doesn’t even sell in Alberta.

But where Milke and Kenney hope it will sell is Wall St. “When so-called ‘ethical investors’ do not treat tyranny-produced oil in the same manner they might if the product was a t-shirt assembled by child labourers in southeast Asia, or diamonds mined with slave labour in Africa (where profits were funnelled to guerrilla forces— blood diamonds, they make a choice,” Milke argued in a war room commentary.

Wall St. and international investors aren’t buying that malarkey because they understand the importance of climate change and reducing greenhouse gas emissions. Climate risk assessments now influence how capital is elected, as Alberta has ruefully learned the hard way thanks to financing restrictions imposed by UK-based HSBC bank and the giant Zurich Group insurance company, as well as oil sands divestments by the Norwegian sovereign wealth fund, to name a few.

The Tyranny Index was a flop and deservedly so.

Ban Saudi oil from North America

But that didn’t stop Kenney from using Ethical Oil to argue for banning Saudi oil from North America using import tariffs. According to the Financial Post in April, Kenney said “prospective import tariffs on oil coming into North America” were under discussion with Washington.

A quick perusal of Canadian Energy Regulator data shows the flaw in Kenney’s argument. This past January, Canada imported 750,000 barrels per day of crude oil, 78 per cent of it from the United States. Only 13 per cent came from Saudi Arabia. 

Why would Canada start a trade war for under 100,000 barrels per day of Saudi crude oil imports? About $1.5 billion of Canadian exports to the Kingdom would be in jeopardy. And what would happen to the jobs of the 5,000 Albertans working in Saudi Arabia?

Railing against “dictator oil” makes for great tweets and creates employment in the war room, but it’s not hard to see there’s no incentive for Ottawa to back Kenney’s demand for import tariffs.

Watch this interview with international trade economist Professor John Ries of UBC for an expert explanation of why Kenney’s idea of “fortress North America” will never fly.

The ultimate hypocrisy

The Saudi-backed petrochemical plan would almost certainly qualify for grants under the Petrochemical Diversification Incentive Program. How much money might be involved?

The relaunched petrochemical diversification program – Rachel Notley’s NDP government created the first version in 2018 – was announced October 30. Up to 12 per cent of capital costs are eligible for grants and there is no cap to the program. A back of the cocktail napkin calculation suggests the Saudi investor could receive $600 million to $1.2 billion from the Alberta government.

This would be a good deal for Alberta and the provincial government would almost certainly recoup the grants many times over via increased tax revenue, while at the same time creating good-paying jobs for Albertans.

But if he is willing to fold like a cheap tent on a bedrock UCP and oil and gas industry narrative, what does that say about his commitment to his other controversial positions? For example, is the Premier’s loud and frequent criticism of “federal regulatory uncertainty” sincere or is that just a convenient stick with which to beat Trudeau in the media, to be abandoned at a moment’s notice if the circumstances are right?

Kenney once accused Trudeau of having the intellectual depth of a finger bowl, a comment he grudgingly retracted. It’s now apparent the Premier may have the ethical depth of that same bowl, but it’s his own actions, not a political opponent’s snark, that has revealed his true character.

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