Economy
Panama Canal drying up woes could have benefited Canadian LNG – If only we had any
From the Frontier Centre for Public Policy
There’s a disturbance in the force of global shipping, as if a major transit point started slipping away.
There’s a very serious problem occurring a few thousand miles to the south of us, one that Canada could have taken tremendous advantage of, if only we had built and completed some liquified natural gas (LNG) terminals by now.
The Panama Canal, one of the wonders of the modern world that utterly changed trade and geopolitics, is drying up.
The canal, which usually handles about 36 ships a day, has in recent days reduced that to 24. By Feb. 1, it is expected to fall to 18. And the largest ships who do transit the canal have to reduce their cargoes, lest they scrape bottom.
That’s because the canal uses fresh water, captured by dams and forming the massive Gatun Lake. That fresh water is collected from ample rains. Every single time a ship passes through the canal, water used to operate the locks is flushed into the ocean. While the greatly expanded third set of locks allows much, much larger ships to use the more than 100 year-old canal, they also use a lot of water despite an innovative water recovery system. And the Canal Authority says they’ve had the lowest rains in 73 years, since 1950.
So when you add up the additional, much larger locks, with a local drought, the canal is rapidly falling into crisis. And the world is starting to take notice.
As they should, since soon half of all ships that usually use the canal will be turned away.
No one depends on the canal more than the Americans. They built it, after all, for a reason. And one of the biggest is it allows for quick access for Gulf Coast ports to Pacific markets. This was a very real reason why building a half dozen large LNG terminals made so much sense (in addition to their proximity to gas production.)
Well, a lot of that just got thrown out the window. Cutting ship transit numbers by half means a dramatic curtailment of the ability of US LNG cargoes to access the Pacific markets. Their alternative is to add something like 8,000 miles going around South America’s Cape Horn, which absolutely no one wants to do due to the treacherous weather and seas.. Otherwise, they have to cross the Atlantic, Mediterranean, Red Sea, Indian Ocean and Straits of Malacca to get to east Asia markets.
The net effect will be some cargoes from the Gulf Coast destined for Asia will have to go much, much further to deliver their product. That means fewer cargoes per ship per year. It’ll tighten up ship availability, and likely put pressure on LNG prices.
And if Canada had moved quicker on building out LNG terminals, particularly on the West Coast, we would be perfectly positioned to cash in on this situation. Not only is Kitimat, Prince Rupert and the like much, much closer to China and Japan, there’s no drying up Panama Canal to contend with, either.
Small wonder, then, Conservative Leader Pierre Poilievre chose on November 10 to post on his various social media channels, “Since Trudeau took office: 18 LNG terminals have been proposed. 0 have been completed.”
To be fair, LNG Canada, the largest proposal, is in the finishing stretch. In July they reported 85 per cent completion. In recent weeks, TC Energy reported the completion of the “golden weld” on the Coastal GasLink pipeline that will supply LNG Canada and presumably other facilities on the West Coast. Without pipeline, which was both massively delayed and overbudget, no small thanks to pipeline protesters, LNG Canada would be useless.
Other projects are finally gaining traction – Woodfibre LNG at Squamish on the south coast, and Ksi Lisims LNG right on the Alaska/BC border, and Cedar LNG, a floating LNG terminal adjacent to LNG Canada and served by Coastal GasLink.
Remember when the German chancellor came to Canada, seeking LNG, and was told by Prime Minister Justin Trudeau there was “no business case?” And then the Japanese prime minister was told something similar a few weeks later?
The Ukraine War has proven a business case for almost two years in the Atlantic basin. The Panama Canal reduction in service will soon prove it in the Pacific. What more do we need?
Canada should have built these projects years ago. We’d be securing markets and cashing in today.
No business case, indeed.
Brian Zinchuk is editor and owner of PipelineOnline.ca, and occasional contributor to the Frontier Centre for Public Policy. He can be reached at [email protected].
From LifeSiteNews
Saskatchewan has become the first Canadian province to free itself entirely of the carbon tax.
On March 27, Saskatchewan Premier Scott Moe announced the removal of the provincial industrial carbon tax beginning April 1, boosting the province’s industry and making Saskatchewan the first carbon tax free province.
Under Moe’s direction, Saskatchewan has dropped the industrial carbon tax which he says will allow Saskatchewan to thrive under a “tariff environment.”
“I would hope that all of the parties running in the federal election would agree with those objectives and allow the provinces to regulate in this area without imposing the federal backstop,” he continued.
The removal of the tax is estimated to save Saskatchewan residents up to 18 cents a liter in gas prices.
The removal of the tax will take place on April 1, the same day the consumer carbon tax will reduce to 0 percent under Prime Minister Mark Carney’s direction. Notably, Carney did not scrap the carbon tax legislation: he just reduced its current rate to zero. This means it could come back at any time.
Furthermore, while Carney has dropped the consumer carbon tax, he has previously revealed that he wishes to implement a corporation carbon tax, the effects of which many argued would trickle down to all Canadians.
The Saskatchewan Association of Rural Municipalities (SARM) celebrated Moe’s move, noting that the carbon tax was especially difficult on farmers.
“I think the carbon tax has been in place for approximately six years now coming up in April and the cost keeps going up every year,” SARM president Bill Huber said.
“It puts our farming community and our business people in rural municipalities at a competitive disadvantage, having to pay this and compete on the world stage,” he continued.
“We’ve got a carbon tax on power — and that’s going to be gone now — and propane and natural gas and we use them more and more every year, with grain drying and different things in our farming operations,” he explained.
“I know most producers that have grain drying systems have three-phase power. If they haven’t got natural gas, they have propane to fire those dryers. And that cost goes on and on at a high level, and it’s made us more noncompetitive on a world stage,” Huber decalred.
The carbon tax is wildly unpopular and blamed for the rising cost of living throughout Canada. Currently, Canadians living in provinces under the federal carbon pricing scheme pay $80 per tonne.
As the federal government removes the consumer carbon tax, the Canadian Taxpayers Federation is calling on all party leaders to oppose all carbon taxes, including the hidden tax on business.
“Canadians fought hard to force Ottawa to back down on its consumer carbon tax and now the fight moves to stopping the hidden carbon tax on business,” said Franco Terrazzano, CTF Federal Director. “Canadians can’t afford a carbon tax on business that pushes up prices at the gas station and makes it harder for our businesses to compete while they’re already struggling with a trade war.”
Today, the federal government cut the consumer carbon tax rate to $0. This will reduce taxes by about 17 cents per litre of gasoline, 21 cents per litre of diesel and 15 cents per cubic metre of natural gas.
The federal government still imposes an industrial carbon tax on oil and gas, steel and fertilizer businesses, among others.
During the Liberal Party leadership race, Prime Minister Mark Carney said he would “improve and tighten” the industrial carbon tax and “extend the framework to 2035.”
Just 12 per cent of Canadians believe businesses pay most of the cost of the industrial carbon tax, according to a Leger poll commissioned by the CTF. Meanwhile, 70 per cent said businesses would pass most or some carbon tax costs on to consumers.
Conservative Party Leader Pierre Poilievre said he will “repeal the entire carbon tax law, including the tax on Canadian businesses and industries.”
“Carbon taxes on refineries make gas more expensive, carbon taxes on utilities make home heating more expensive and carbon taxes on fertilizer plants increase costs for farmers and that makes groceries more expensive,” Terrazzano said. “Canadians know Poilievre will end all carbon taxes and Canadians know Carney’s carbon tax costs won’t be zero.
“Carney owes Canadians a clear answer: How much will your carbon tax cost?”
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