ALF V1

Reality Check:  Profits, Prices, and Access to Markets

Alberta is producing too much of the wrong product; no mystery why oil companies are getting a low price.

The Government of Alberta’s evidence filed with the Joint Review Panel for the Northern Gateway pipeline shows Alberta’s failure to upgrade bitumen is what is causing lower prices for bitumen and what is driving the alleged need for the Northern Gateway pipeline.

The Government of Alberta hired energy consultant firm Wood Mackenzie to do an analysis on the need for “new markets” for Alberta’s bitumen. The analysis is designed to support the Northern Gateway pipeline.

The report is technical in nature.

The GoA evidence says oil sands producers “could” lose up to $8/barrel because bitumen is flooding North American refineries incapable of handling it. Chinese refineries can handle bitumen, and it makes sense for oil sands operators deeply involved with Chinese state-owned oil companies to ship raw bitumen to Chinese refineries, who rely on lower labour and environmental laws.

There is plenty of North American refinery space for synthetic crude oil, which is upgraded bitumen. But the Government of Alberta hasn’t forced companies to build upgraders, and has allowed a stampede of development without any regard for keeping jobs in Alberta.

The Government of Alberta is responsible for the problems they describe in their evidence. We are pulling bitumen – a lower-quality product – out of the ground, shipping it out as fast as we can, flooding the market with a low-quality product, and wondering why we are losing money.

The Wood MacKenzie report before the NEB might be complicated and technical, but the explanation is quite simple. Upgrade the resource before it leaves Alberta, keep the good jobs here, earn more tax and royalty revenues for Albertans, and the economic case for the Northern Gateway pipeline evaporates.

Technical Backgrounder on the Wood MacKenzie Report

Wood MacKenzie’s $8/barrel “discount”

WMK’s $8/barrel discount prediction is a figure based on the concept of “refining value.”

WMK predicts Canadian producers “could continue to lose approximately C$8/bbl relative to its refining value.”[1]

The discount of value is driven by the fuel oil yield in the cracking configuration, which sells at a discount to the gasoline and diesel produced in a coking configuration.

“The Refining Value, which is the value of refined petroleum products produced from a given crude oil, falls as a refinery configuration becomes more ‘simple’ because the simpler configuration has less capability to convert the lower-value heavy end of the crude assay to higher-value products, such as transportation fuels.”[2]

The $8/barrel “discount” is attributable to:

• A glut of supply for coking refineries
• Too much non-upgraded bitumen looking for a home. It is finding its home in cracking refineries, thus simply producing fuel oil rather than diesel or gasoline

Prediction of losses of refining value are further attributable to:

• Not enough pipeline capacity to “premium heavy crude markets,” aka refineries that can process bitumen straight into gasoline or diesel
• Runaway growth in bitumen supply and a glut on the market

The Wood Mackenzie analysis relies on the following assumptions:

• A lack of upgraders in Alberta. If bitumen is upgraded to SCO in greater amounts, higher refining values can be achieved
• A prediction of just 26% of Alberta bitumen being upgraded by 2025, far below the Government of Alberta’s stated policy goal of 2/3 bitumen upgraded in Alberta
• A growth in supply due to ERCB approving every project, without associated upgrading capability
• A total lack of pacing by the GoA Department of Energy
• Ignoring the use of rail entirely, which is not only being used right now but also contained in Enbridge’s analysis

Heavy Crude Refining Predicted to Fall in Western Canada With Northern Gateway

According to Enbridge’s evidence before the National Energy Board, Western Canadian “heavy crude” – aka bitumen coming from the oil sands -  will be increasingly refined in China, where state-owned companies are building massive refining complexes capable of handling bitumen.

Western Canada Refinery Throughput[3]	2011 Refinery Throughput – Reported to CAPP	2018 Forecast By Enbridge – With Northern Gateway Pipeline
Conventional Light-Medium	173,000	110,100
Synthetic Sweet	205,000	245,900
Heavy Crude, All Grades	199,000	152,400
Sour Synthetic	N/A	67,500
Total Throughput – Western Canada	577,000	575,900

About the AFL Northern Gateway Reality Check Series

The Alberta Federation of Labour is a full intervener in the Northern Gateway Pipeline.

The debate around the Northern Gateway pipeline is heated, and we hear governments and industry saying all kinds of things to justify locking Canada in to being a raw resource producer, but never move up the value chain with our natural resource wealth.

“The Northern Gateway pipeline hollows out our value-added industries, imposes higher oil prices on consumers, and rewrites the rules of Canada’s oil industry. Gateway will reduce the amount of oil sands upgraded in Alberta and ship thousands of jobs to China,” Gil McGowan, President, Alberta Federation of Labour.

Spooked by '80s recession, it sped up extraction of crude worth way more today. Eighth in a series.

There was a time when it made good sense to convert hard assets like pork bellies or iron ore into convenient and liquid cash. But with today's global currency crises quietly draining value from millions of people's savings, the commodity tide is now flowing rapidly the other way. Many financial advisors now promote an "end times" investment strategy focused on raw resources that, among other things, is leading to a gold-rush on fertile farmland around the globe.

This has serious implications for Canada as a nation rich in non-renewable resources. Our nation's business plan since confederation has largely been to liquidate these resources as cheaply and quickly as possible. A focus on volume-based extraction with minimal value-added processing plays out most recently in the Alberta oil sands, where pell-mell development is preoccupied with piping unrefined bitumen to outside markets. If globally scarce and strategic resources are rising in value compared to paper money, what's the rush to convert it to cash? Would Canadians benefit more from a go-slow approach to resource development?

This series has so far focused on seeking lessons from Norway regarding Canada's petroleum policies (or lack thereof). Norway's $600-billion oil fund is often seen as symbol of disciplined success managing their petroleum resources. However, this vast investment fund is in fact the result of a fundamental shift away from some of the fiercely independent policies instituted in the 1970s. These choices around the pace of Norwegian oil development hold important and cautionary lessons for us here in Canada.

One of the founding documents of Norwegian oil policy from 1974 stated, "...After a comprehensive evaluation of its social aspects, the Government has concluded that Norway should take a moderate pace in the extraction of petroleum resources."

These words represented a bold ambition on the part of the small Nordic country: to intentionally go slow with oil development to protect the non-oil aspects of their economy, and their society as a whole.

This "moderate pace" of extraction was defined as 90 million tonnes of oil equivalent per year -- a level that was not reached until the late 1980s. In 1988, the Norwegian parliament also agreed that annual oil investments should be limited to 25 billion Norwegian kroner (about $4.2 billion).

But in politics as in life, nothing is permanent. Norway experienced a stinging recession in the late 1980s when oil prices collapsed and the jobless rate reached six per cent -- mild by North American standards but a shock for a country accustomed to full employment. These political pressures led to a quiet but dramatic increase in Norwegian oil production in the 1990s with wide-ranging consequences now being felt by the Nordic nation.

Race to bank wealth

A detailed history of Norway's oil industry by Dr. Helge Ryggvik at the University of Oslo showed that by 1993, oil investments had blown past the ceiling set by parliament, reaching 53 billion kroner. Oil production doubled over 1988 levels, reaching 2.3 million barrels per day.

A government white paper at the time seemed to abandon any attempt to maintain a moderate pace of production, stating "Activity levels in the petroleum industry are to a considerable extent dependent on conditions we cannot control" -- a major departure from the steely determination of 20 years earlier.

This decision to open the oil production floodgates also led directly to the formation of the Norwegian oil fund. The rationale was that oil wealth could be converted into cash and stored in the bank instead of underground. Economists argued that revenues invested in securities would yield interest immediately and dilute the risk of fluctuating oil prices. Between 1986 and 2001, oil production increased almost four-fold and has been declining ever since.

But economists are not always right. Compared to today, oil prices in the 1990s were in the toilet -- not rising above $45 per barrel until 2004. So what would have happened had Norway stuck to their guiding principles and maintained a moderate pace of petroleum development?

In 1986, Norway was producing 841,000 barrels per day. If they recovered 70 per cent of these revenues through taxation of oil sales based on yearly prices to present day, they would still have about $229 billion in the bank in 2011. They would also have an additional 14.2 billion barrels of reserves more than they do now, worth about $1.5 trillion at today's price of $110 per barrel for Brent crude.

Assuming that 70 per cent of that wealth was converted to revenues for the benefit of the Norwegian taxpayer, this would amount to about $1.1 trillion. In addition to the $229 billion in the bank, Norway would therefore have approximately $1.3 trillion in investments and extractable reserves -- about $700 billion ahead of where they are now.

Bubble tendencies

This rush to production has also created many of the same problems faced in Alberta by ballooning costs and labour shortages. A strike by oil workers this year cut production by 15 per cent, and another looming strike by oil service workers is heading to arbitration next month.

Oil professionals in Norway make more than $180,000 per year – double the global average. Drilling costs are 40 per cent higher than in the U.K. Statoil is considering cutting 1,000 jobs or 30 per cent of their workforce in an effort to reduce costs.

Annual oil investments will reach a record 204 billion kroner next year, almost 10 times the ceiling proclaimed by Norwegian parliament in 1988. Norway's Oil Minister Ola Borten Moe defends rising industry wages but acknowledges, "We have a responsibility, together, to make sure we don't build bubble tendencies in this part of the economy."

The oil fund has become so large that even minor withdrawals into general revenue are overheating the Norwegian economy. By law, the government is allowed to utilize four per cent of the fund annually but observers predict the budget this year will only access 2.5 per cent of this mountain of money for fear of further driving up domestic wages.

Norwegian industry leaders are predictably cool on calls to slow petroleum production. "In other countries, a discussion about how we should restrict the (oil and gas) activity would sound like a joke," said Statoil CEO Helge Lund. "If the critics get what they want, the Norwegian shelf will lose its competitiveness and the entire development of Norway's oil industry, with hundreds of thousands of jobs at stake, would be put at risk."

Meanwhile Norway's remaining oil reserves have dwindled under the vastly ramped-up extraction that peaked in 2001. Production is less than half of what it was 10 years ago. While a major new discovery was made recently on the Norwegian shelf, questions remain about how much longer Norway will remain a major oil exporter. The 2012 Statistical Review of World Energy by BP showed that in 2011 Norway had less than 10 years of reserves left at current levels of production.

Cut the boom and bust

What does this mean for Canada? The mantra here seems to be to maximize investment and production at all costs. Investments in the Alberta oil sands have topped $10 billion every year since 2006. The Alberta government predicts that production will double by 2020 to 3.5 million barrels per day.

Yet this frantic pace of development has created numerous boom/bust cycles, and calls from both the Alberta Federation of Labour and the late premier Peter Lougheed to slow the pace of oil sands growth.

Even with the massive distortion created by the oil sands in the Alberta workforce, the province has been unable to balance the books since 2007. In that time the province has so far spent $17.1 billion of past oil wealth, with another $3 billion deficit forecast for the coming budget. Clearly the legacy of Peter Lougheed to "think like an owner" has been forgotten.

Sitting on such a massive investment fund, Norway has obviously fared much better. However, they are also dealing with their own challenges resulting from their rush to development and declining oil reserves. If there is a lesson and advantage for Canada from the Norwegian oil experience, it is the importance (and profitability) of going slow.

Next Wednesday, the final instalment of this series: What if Canada had a national petroleum policy?

TheTyee.ca, Wedn Sep 26, 2012
Byline: Mitchell Anderson

CALGARY, Alberta, Sept 24 (Reuters) - A lawyer for Enbridge Inc said on Monday that a prominent economist opposed to its Northern Gateway oil pipeline to Canada's West Coast is wrong in her contention that the project will raise costs for refiners, regardless of where their crude comes from.

At public hearings into the C$6 billion ($6.1 billion) project, Enbridge attorney Rick Neufeld told British Columbia economist Robyn Allan the company's market experts have shown that Northern Gateway will not restrict crude supplies in other markets on the continent, as she has concluded.

Allan, former chief executive of the Insurance Corp of British Columbia, provided an economic assessment of Northern Gateway early this year for the Alberta Federation of Labour, which opposes the 525,000 barrel a day pipeline from Alberta to Kitimat, British Columbia, for crude oil shipment to Asia.

Neufeld took issue with Allan's evidence that the export pipeline would result in $2-$3 per barrel annual increases in oil prices across the country between 2016 and 2046, including for Eastern refineries now supplied almost exclusively with imported oil priced against international benchmark Brent oil.

"Indeed that's what you've told people around the country, and I'm suggesting to you, Ms Allan, that that's not the evidence of these witnesses," Neufeld said at the proceedings in Edmonton. "They did not suggest that Northern Gateway would increase the price of Brent crude, and you were here for that."

The exchange was part of the first opportunity Enbridge has had to cross-examine its opponents. Most of the testimony in hearings before a federal Joint Review Panel into the contentious Northern Gateway project has so far been about environmental issues, but the Edmonton proceedings are delving solely into economic impacts and benefits.

One aim of the project is to remove a price discount on Canadian oil that currently exists due to an oversupply of oil in traditional markets such as the U.S. Midwest. Enbridge said Canadian producers would benefit by diversifying their markets to include Asia, where prices are higher.

The Alberta Federation of Labour opposes the pipeline because, the group says, it would mean the loss of oil processing and refining jobs in Canada as the raw material gets shipped across the Rockies to the Pacific.

Neufeld said Enbridge's evidence, prepared by consultants Muse Stancil and Wright Mansell Research, did not show that the pipeline would restrict oil supplies in North America, push up gasoline prices for consumers, or have any impact on oil prices in other parts of the world, as Allan has concluded.

Allan has argued that restricted supply in North American markets as a result of oil being redirected to Asia on Northern Gateway, and the international determination of crude prices, will push up prices for all supply bought by Canadian refiners.

"In your view then, if Northern Gateway was to improve the price - or reduce the discounting of Canadian crude, put it that way - by $2 a barrel, the price of crude delivered by OPEC would increase by $2 a barrel. That's your evidence?," Neufeld said.

Allan did not argue that point, saying she derived her contentions by taking numbers and assumptions in Enbridge's expert reports to their "logical conclusion."

"Based on the analysis that was provided in both the Muse and the Wright Mansell reports, the redirection of supply takes oil out of markets and when the supply goes down, the price goes up," she said. "With the ... fact that the oil is going to be redirected from Ontario and Quebec, that is going to affect the Eastern Canadian market."

However, her written evidence criticizes Enbridge's reports, saying they leave out a number of aspects that raise questions about their reliability. Those include analysis of sensitivities to prices, currency exchange rates, changes to supply as well as other risks to the forecasts.

"All of those are standard business practice that would be undertaken if the proponent's analysis was delivered to an investor or a lender. In any of the other places where it needs to prove its case, those standards would have been delivered," she said.

Rueters, Tues Sept 25 2012
Byline: Jeffrey Jones

The late Peter Lougheed's enduring legacy in Alberta's oil industry was evident Monday as the former Alberta premier was cited by both proponents and opponents of the contentious Northern Gateway pipeline during regulatory hearings in Edmonton.

Both sides claimed support from the widely respected Lougheed, who died Sept. 13.

"In one of his last interviews, didn't he say the (Northern Gateway) pipeline was essential for Alberta?" Enbridge lawyer Rick Neufeld asked at one point during his cross-examination of Alberta Federation of Labour president Gil McGowan.

McGowan responded that Lougheed shared the federation's concerns about the pace of oilsands development, that too many oilsands projects exported raw bitumen and there are not enough benefits to Alberta from upgrading and refining the bitumen into consumer products locally.

"Lougheed took an activist approach to ensure we had a value-added industry," he said, according to a story from The Canadian Press. "It (the oilsands industry) wouldn't have been here without government policy and intervention."

Here's a thought: both sides should cease and desist with the Lougheed references.

Lougheed was a champion of oilsands development but he was also concerned about the rapid pace of development. He has been widely lauded since his passing as one of Canada's greatest politicians and statesmen. His family and friends continue to mourn his passing even as his name is being bandied about the hearing room for one of the most contentious public policy debates in Canada in years.

To be clear, it's as far from speaking ill of the dead as possible. There's presumably nothing but respect for the former premier from everyone involved in these exchanges, but it still comes off as ill-timed at a minimum.

The allure of an "endorsement" from Lougheed for either side is obvious.

Third-party endorsement - especially from a credible and respected source - is invaluable to any communication campaign. Make no mistake, every word uttered during the hearings is part of a broader communications strategy by all sides in the campaigns for or against regulatory approval and public support for any pipeline.

Regardless, it seems inappropriate to cite, or even imply, support from Lougheed as if it was some sort of message from on high or death-bed confession simply be-cause it serves your political or commercial endeavour.

It's not as if the current premiers - from Alberta's Alison Redford, among the proponents, and B.C.'s Christy Clark, for the opponents - haven't provided enough commentary on the $6-billion pipeline project. Both have offered up more than enough observations to provide fodder for lawyers at the Joint Review Panel for weeks.

They can also explain or defend their positions and not leave it to others to interpret and infer what may, or may not, be relevant.

The references to Lougheed came as Enbridge and some oil producers that have secured ship-ping on the 525,000 barrel a day pipeline got to cross examine witnesses before the Joint Review Panel for the first time in the hearing process.

The Edmonton portion of the hearings, which addresses economic issues, are scheduled to conclude this week. The hearings will resume in October in Prince George, B.C., to address concerns about the environment and First Nations along the 1,172 kilometre route. Finally the panel moves on to Prince Rupert, B.C. to address maritime issues once bitumen is moved onto ocean-going tankers.

A decision from the Joint Re-view Panel is expected in 2013.

The federation has said the pipeline taking bitumen from the Edmonton area to the B.C. coast at Kitimat for export to Pacific Rim markets will make it harder to create upgrading and refining jobs in Alberta and increase fuel prices throughout Canada. Enbridge contends that isn't the case.

Neufeld noted there is plenty of bitumen available in Alberta and Enbridge has never said it would restrict bitumen for refineries or upgraders.

McGowan also said export pipelines would add to an already overheated economy with higher labour and material costs.

Neufeld challenged economist Robyn Allan over her statements the 550,000-barrel-per-day pipe-line would push up the price of crude oil by $2 to $3 a barrel annually in Canada. Enbridge said Northern Gateway would create a one-time boost of $2 to $3 per barrel if it comes on stream at the end of this decade.

Allan responded: "When you take oil out of North America and take it to Asia the price increase is going to affect all markets in the long run."

And that is exactly the difference.

Allan, McGowan, Neufeld and the others can all speak for themselves. Lougheed cannot and, as a sign of respect, he should be left out of these hearings.

Calgary Herald, Tues Sept 25 2012
Byline: Stephen Ewart

EDMONTON - Comments made by the late Peter Lougheed hung over public hearings Monday about a pipeline that would ship bitumen from Alberta's oilsands to Asian markets.

Both sides in the debate tried to claim the support of the former Alberta premier who died Sept. 13.

Rick Neufeld, lawyer for pipeline proponent Enbridge (TSX:ENB), suggested Lougheed backed the line's construction.

"In one of his last interviews, didn't he say the (Northern Gateway) pipeline was essential for Alberta?" he asked while cross-examining Gil McGowan, president of the Alberta Federation of Labour.

In response, McGowan suggested Lougheed was sympathetic to the federation's concerns that too many oilsands projects were exporting raw bitumen and robbing Albertans of some of the benefits they would reap from upgrading it in the province.

"Lougheed took an activist approach to ensure we had a value-added industry," McGowan told the National Energy Board. "It wouldn't have been here without government policy and intervention."

The federation's previous testimony that the $6-billion project would make it harder to create upgrading and refining jobs in Alberta, as well as increase fuel prices throughout Canada, came under repeated attack in Monday's cross-examination.

Neufeld pointed out there is no shortage of bitumen currently available for anyone interesting in building a refinery. Nor has Calgary-based Enbridge ever said it would restrict access to bitumen.

He disputed the notion that pipelines encourage the export of raw natural resources. He noted that the Transmountain pipeline originally built to transport crude now moves both oil and refined products.

McGowan responded that the labour group believes projects such as Northern Gateway help price Alberta out of the market for new industrial development. He said the pipeline would only help speed oilsands development, creating demands for labour and materials that drive up their cost.

Neufeld also grilled federation adviser Robyn Allan over her testimony that the 550,000-barrel-a-day pipeline would drive up fuel costs in the rest of Canada.

"So if Canadian producers get higher netbacks in Edmonton, refineries will have to pay more in New Brunswick?" he asked.

Allan responded that oil shipped to Asia would no longer be available to North Americans, which will eventually raise its price.

"When you take oil out of North America and take it to Asia the price increase is going to affect all markets in the long run," she said.

Enbridge analysts have argued that the price of oil is set globally and the Gateway pipeline wouldn't change the price of the Venezuelan, European and Middle Eastern oil on which refineries in Central Canada rely.

In afternoon testimony, federation lawyer Leanne Chahley revisited potential Chinese ownership shares in the pipeline.

Cross-examining a panel of energy producers who hope to ship on Gateway, Chahley pointed out that one of them — Nexen — is being bought out by the Chinese National Offshore Oil Corp. Nexen holds one of 10 shares that give it an option for a five per cent ownership stake.

MEG Energy — owner of another of the ownership options — is about 15 per cent owned by the Chinese corporation.

Chahley also pointed out that Total E and P Canada, another hopeful Gateway shipper, is involved with two developments that include some level of Chinese investment.

The Canadian Press online edition, Monday Sept 24 2012
Byline: Bob Weber

Bitumen pipeline placement

Comments made by the late Peter Lougheed hung over public hearings Monday about a pipeline that would ship bitumen from Alberta's oilsands to Asian markets.

Both sides in the debate tried to claim the support of the former Alberta premier who died Sept. 13.

Rick Neufeld, lawyer for pipeline proponent Enbridge (TSX:ENB), suggested Lougheed backed the line's construction.

"In one of his last interviews, didn't he say the [Northern Gateway] pipeline was essential for Alberta?" he asked while cross-examining Gil McGowan, president of the Alberta Federation of Labour.

In response, McGowan suggested Lougheed was sympathetic to the federation's concerns that too many oilsands projects were exporting raw bitumen and robbing Albertans of some of the benefits they would reap from upgrading it in the province.

"Lougheed took an activist approach to ensure we had a value-added industry," McGowan told the National Energy Board. "It wouldn't have been here without government policy and intervention."

The federation's previous testimony that the $6-billion project would make it harder to create upgrading and refining jobs in Alberta, as well as increase fuel prices throughout Canada, came under repeated attack in Monday's cross-examination.

No shortage of bitumen

Neufeld pointed out there is no shortage of bitumen currently available for anyone interested in building a refinery. Nor has Calgary-based Enbridge ever said it would restrict access to bitumen.

He disputed the notion that pipelines encourage the export of raw natural resources. He noted that the Transmountain pipeline originally built to transport crude now moves both oil and refined products.

McGowan responded that the labour group believes projects such as Northern Gateway help price Alberta out of the market for new industrial development. He said the pipeline would only help speed oilsands development, creating demands for labour and materials that drive up their cost.

Neufeld also grilled federation adviser Robyn Allan over her testimony that the 550,000-barrel-a-day pipeline would drive up fuel costs in the rest of Canada.

"So if Canadian producers get higher netbacks in Edmonton, refineries will have to pay more in New Brunswick?" he asked.

Allan responded that oil shipped to Asia would no longer be available to North Americans, which will eventually raise its price.

"When you take oil out of North America and take it to Asia the price increase is going to affect all markets in the long run," she said.

Enbridge analysts have argued that the price of oil is set globally and the Gateway pipeline wouldn't change the price of the Venezuelan, European and Middle Eastern oil on which refineries in Central Canada rely.

In afternoon testimony, federation lawyer Leanne Chahley revisited potential Chinese ownership shares in the pipeline.

Cross-examining a panel of energy producers who hope to ship on Gateway, Chahley pointed out that one of them — Nexen — is being bought out by the Chinese National Offshore Oil Corp. Nexen holds one of 10 shares that give it an option for a five per cent ownership stake.

MEG Energy — owner of another of the ownership options — is about 15 per cent owned by the Chinese corporation.

Chahley also pointed out that Total E and P Canada, another hopeful Gateway shipper, is involved with two developments that include some level of Chinese investment.

CBC News and iPolitics, Mon Sept 24 2012
The Canadian Press

The Left should remember what the Right has known for years

How ironic that the Right seems more aware than the Left of the crucial importance of unions to progressive politics. In the past, when conservatives were less aggressive, this didn't matter so much. Now, in the age of Stephen Harper and the Tea Party, the stakes are much higher.

In the USA and here in Canada under Harper (and, of course, under Brad Wall in former social democratic homeland Saskatchewan), new laws are sapping the strength and even the existence of unions, too often with little public outcry.

In Parliament, a bill is due for debate and possibly a vote this fall that could cripple unions of all sizes with expensive and nosy paperwork. National Post columnist John Ivison, no fan of the labour movement, wrote that Bill C-377 (Public Financial Disclosure for Labour Organizations) "could shatter the union business model forever."

More worrisome still are recent threats by Parliamentary Secretary Pierre Poilevre to punish the Public Service Alliance of Canada for supporting the Parti-Québecois in Quebec's provincial election by ending automatic union membership in federal workplaces under what's known as the "Rand Formula." Although the majority of workplaces are provincially regulated, this could mark the beginning of the end of Rand and drastically weaken federal public service unions.

Regardless of whether we belong to unions or work in organized sectors, these moves threaten all Canadians, yet, to date, public response has been muted. Why are these moves such a threat?

Labour is at the centre of all progressive politics

"Labour is at the centre of all progressive politics," Alberta Federation of Labour President Gil McGowan reminded in an interview following SGN's weekend conference on labour's image. "Labour is powerful. That's the reason they've targeted us, they've put the bullseye on us because they recognize we have power at the bargaining table, we have power in our communities, we have political power, and that power can be used against them. They want to undermine that power. They want to take apart civil society so they can change Canada."

Rand has been the National Citizen's Coalition's target since it was formed, under Harper and other CEOs. Conservative activists recognized then as now that unions have a regular source of income through member dues, unlike any other progressive organizations. And unions use their influence and theie money to support and promote a range of progressive causes and activists. SGNews is one of a long list of progressive projects supported very significantly by the labour movement.

Without public services, public service workers, union members, Rand, and dues — and a great many progressive projects, and the advocates who work for them, are at risk.

Since the 1980s under Reagan, US Republicans have worked to "de-fund the Left," going after advocacy groups, university student councils, progressive lawyers and legal clinics, charities, and, of course, unions.

The Harperites understand the importance of this directive better than any conservatives in Canada before them. When they had a minority government, they worked systematically to eliminate funding for any of the issues they don't like, such as feminism, environment, and social justice. Now they have a majority, they are gunning for big game — unions — and only widespread public outrage can stop them.

At SGN's workshop, speakers from the world of advertising discussed the art and science of branding and images and showed how unions could apply their knowledge through careful research and by focussing their creative efforts . The group heard that over the years, the union image has been steadily corroded by attacks that often go unanswered from right-wing interests.

"We're facing a government that's more like the Tea Party Right," said McGowan. They have a political plan, they have a communications plan, and they're targeting us. If we're going to be successful in fighting back, we have to have conversations like we had today... We have an obligation to get our act together, protect the labour movement, and also, in doing so, protect broader civil society," McGowan told us.

Conference participant David Climenhaga, of the United Nurses of Alberta (UNA), has similar concerns. "We need to respond instantly to the barrage of anti-union propoganda that we're hearing from organizations that have been set up and intelligently run in order to attack not just unions but progressive policies and the rights of working people," he told Straight Goods News. "All the time, we cede the room to them by letting them make powerful statements that are simply based on unsound research, politically motivated research, and that are in many cases outright false. They become the truth because we don't bother speaking back to them."

As a result of the constant barrage, union support has slipped and needs to be bolstered. Janice Peterson, another workshop participant from the United Nurses of Alberta (UNA), told Straight Goods News unions need to face some troubling realities. "Not only do we have a problem with public image, but we also have a huge problem with our own members. We not only have to sell ourselves to the public, we have to sell ourselves to our own members."

It's not too late for the labour movement to rebuild its image, was the message of speaker after speaker at SGN's workshop. Doing so, however, will require hard work, open minds, a lot of listening and research, and making key people in every organization responsible for a focus on improving the reputation and image of their union and unions in general.

"I loved Terry O'Reilly's presentation on rebuilding our message and repositioning ourselves," Francine Filion, of the Canadian Teachers' Federation said. "It can be done. There is a solution."

There has to be a solution, because without strong unions, every progressive cause will be hobbled.

Straight Goods News, Monday Sept 24 2012
Byline: Isa Theilheimer

AFL on witness stand at Northern Gateway hearings; President available to speak to media after testimony ends

Edmonton – AFL President Gil McGowan resumes his time on the witness stand today at the National Energy Board hearings in Edmonton, at the Westwood Conference Centre, 18035 Stony Plain Road.

McGowan is expected to deliver evidence until this afternoon and will be available to the media when he is finished.

The AFL opposes the Northern Gateway pipeline because it is designed to ship unrefined bitumen to China. Thousands of good jobs in refining and upgrading will be lost down the pipeline; the project is therefore not in Canada's public interest.

"Northern Gateway is not Canadian infrastructure. It is Chinese infrastructure," says McGowan.

"Enbridge compared this pipeline to the Canada Pacific Railway. It is certainly a nation-building project; it is certainly designed to guarantee energy security, but it will do those things for China, not Canadians," adds McGowan.

Northern Gateway will connect Chinese-owned oil sands production in Northern Alberta with refineries in China via the pipeline and oil tankers through Kitimat, BC. The National Energy Board must assess whether the project is in the public interest, and is empowered to reject the proposal under the broad definition of the "public interest" contained in Section 52 of the National Energy Board Act.

"The oil industry has told us this pipeline is about chasing a higher price for bitumen in Asia.

"The benefits are only for big, foreign-owned oil companies. Canadians lose the jobs and the industry. Northern Gateway makes northern Alberta into China's gas tank," says McGowan. McGowan adds that federal and provincial governments ought to cooperate to create refining jobs across Canada, and support pipelines that reach "our east, not the Far East."

The Northern Gateway pipeline creates only 224 permanent jobs and about 1,850 short-term construction jobs. Upgrading and refining those resources in Canada would create tens of thousands of permanent jobs.

"Evidence submitted to the NEB shows that if this pipeline is built, in addition to all the other bitumen pipelines that have already been approved, Alberta will only be upgrading 26 percent of its bitumen in 2025, down from about 60 percent today," says McGowan.

"That means that tens of thousands of quality jobs will be lost down the pipeline to places like China. Oil companies and the Chinese government may be happy with this situation. But this is clearly not in the best interest of ordinary working Canadians."

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For more information or to arrange for an interview with AFL President Gil McGowan, after he is finished delivering evidence, contact:

Shannon Phillips at 403-330-9878

EDMONTON - Both sides in the Northern Gateway pipeline debate claimed support from former Alberta premier Peter Lougheed during some testy moments at hearings into the proposed 525,000-barrel-a-day pipeline that would take oilsands bitumen to the west coast of British Columbia.

On Monday, Rick Neufeld, lawyer for pipeline proponent Enbridge Inc., challenged the Alberta Federation of Labour position that shipping raw bitumen to Asia will hurt the Canadian refining industry and send value-added jobs down the pipeline.

AFL President Gil McGowan told the review panel the AFL position reflects the views of Lougheed who urged the province to upgrade bitumen in the province rather the shipping the raw product — and value-added jobs down the pipeline.

McGowan also argued that Lougheed called for a more moderate pace of development in the oilsands to avoid the high inflation of a boom economy that causes construction costs to escalate. Building the $6 billion pipeline at this time would add to that inflationary cycle, aggravate shortage of labour and thereby discourage construction of local upgraders, he said.

That prompted Enbridge lawyer Rick Neufeld to suggest that Lougheed came out in favour of the pipeline in his last interview before he died on Sept 13.

"In one of his last interviews, didn't he say the (Northern Gateway) pipeline was essential for Alberta," Neufeld asked McGowan.

McGowan replied that the AFL is not opposed to new pipelines themselves, just the export of raw bitumen to foreign refineries.

"We're not opposed to accessing new markets, you're just selling the wrong product," McGowan said.

He also told the panel that without Lougheed's intervention, the province would not have a petrochemical industry."

"Lougheed took an activist approach," to establish a petrochemical industry, requiring that ethane feedstock be stripped off natural gas being shipped out of province. "It would not have been here without government intervention."

Neufeld disagreed that Northern Gateway will discourage local refining and said it carries no restrictions on the availability of bitumen for upgrading and refining in Canada.

Neufeld noted that Kinder Morgan's Transmountain pipeline, built in the 1950s from Edmonton to Vancouver, initially carried crude oil only and now also carries refined product.

Neufeld also asked McGowan if — in the wake a speech by Mark Carney, Bank of Canada governor — the AFL had changed its view that the Northern Gateway will promote Dutch disease in the Canadian economy and hurt the manufacturing sector.

In a speech on Sept. 7, Carney said Canada's reliance on oil is "unambiguously good" for the country, called for more pipelines and dismissed fears about Dutch disease.

McGowan dismissed Carney's speech as "political spin that may have come from the PMO ."

Figures in Carney's speech show the higher oil prices are part of the explanation for the higher dollar that hurts manufacturing, said McGowan. "So his lips say no, but his figures say yes."

Later, Neufeld challenged the credentials of economist Robyn Allan who advised the AFL and whose economic analysis shows Canadians will pay with higher prices at the pumps.

Enbridge's analysis dismissed Allan's analysis. Northern Gateway will take 525,000 barrels a day of bitumen out of Western Canada, resulting in higher prices to western Canadian producers.

But the new pipeline would not cause an increase in prices for imported oil paid by eastern Canadian refineries, said Neufeld.

Meanwhile, Canada's Buildings Trades Council, a national organization of construction unions and the Teamsters, came out in favour of the Northern Gateway project.

Canadian construction workers in both Eastern and Western Canada will benefit from thousands of jobs generated in building the pipeline, say the releases.

"The pipeline will further cement our place as an oil producing country in an increasing energy hungry world" and will contribute to Canada's reputation "an energy super power," said the organization, adding that every one dollar spent in construction generates two dollars in the economy.

Later in the day, an AFL lawyer questioned five companies who intend to use the Gateway pipeline to ship bitumen — Cenovus, MEG, Nexen, Suncor and Total.

Calgary-based MEG corporation is currently building a 470,000 a day pipeline from Fort McMurray to Bruderheim near Edmonton. About 130,000 barrels a day of condensate will be needed to blend with the bitumen to get it to flow in the pipeline. That supply will "come into Canada from somewhere," they told the panel.

The review panel must submit its recommendation by December 2013. The federal government will make the final decision.

The Edmonton Journal, Mon Sept 24 2012
Byline: Sheila Pratt

Hearings dealing with the Northern Gateway Pipeline continued in Edmonton, Saturday, and for the first time backers of the project were given the chance to cross examine those opposing it.

The pipeline would run nearly 1,200 kilometres from Bruderheim to Kitimat, on the BC coast. The project would allow bitumen to be sold to Asian markets.

Over the past few weeks, groups opposed to the pipeline have been voicing their concerns to an independent joint review panel. Among them, the Alberta Federation of Labour, which contends the project would move jobs out of the province.

"Our concern is that once it's built, it will become a bitumen superhighway, taking not only raw bitumen from the oil sands out of the province to places like China and the United States, but along with that bitumen we're afraid that it's also going to transport literally tens of thousands of jobs in upgrading and refining," said Gil McGowan, President of the Alberta Federation of Labour.

"The project doesn't preclude refining. We will be able to move synthetic or diluted bitumen, or more conventional oil, so there's nothing to prevent refining from happening. Certainly the very value is in accessing large markets and if refining proves profitable or economic at some point, we can certainly move those products as well," explained John Carruthers, President of Enbridge Northern Gateway Pipelines.

The independent panel is set to make its decision on whether the pipeline should go ahead by December 2013. While the panel's input will carry weight, the final say goes to the Federal Cabinet. It's decision is expected in the summer of 2014.

Global Edmonton, Sat Sept 22 2012