The Kinder Morgan Pipeline Expansion (KMPE) project

The Kinder Morgan Pipeline Expansion (KMPE) project

Introduction:

The Trans Mountain Pipeline has been operational since 1953. It runs from Edmonton, Alberta to terminals and refineries along the west coast of B.C. The expansion of this system would follow the same route as the existing one with a run of 980km. The new pipeline system would transport refined products, synthetic crude oils, light crude oils, and heavier oils. Besides, it would triple the capacity for carrying barrels from approximately 300,000 to 890,000 per day. Also, the TMEP would be subjected to an additional 19 new tanks to the existing storage terminals. With this capacity, the terminal is forecast to serve up to 37 vessels per month. This would be an increase of 14 percent of total marine traffic in Port of Vancouver today. This project is expected to cost $7.4 billion while generating more profits. Besides, the project is expected to create more jobs, generate tax revenues, and stimulate economic growth for the benefit of all Canadians.

The Kinder Morgan Pipeline Expansion (KMPE) project has been one of the most divisive issues in Canadian politics during the past decade. Major political, legal, and ideological conflicts have erupted over this project concerning decision making as Richard Simeon states that “Policy is a consequence of the environment, distribution of power, prevailing ideas, institutional frameworks and the process of decision-making” (Miljan, 2018). The politics that arise in the pipeline have been the limiting factor in defining the institutional rules of the games. This paper will use three theoretical perspectives Marxism, Pluralists, and Public Choice to study the issue of Kinder Morgan Pipeline Expansion and the consequences of different theories in various decisions and interests. This paper focuses on weighing the inclusion of diverse individual interests. Therefore, the government’s best option for securing benefits to particular groups is to halt these pipelines’ construction due to a lack of different interests being met in the policy formation process of the KMPE Project.

1. Marxism:

Marx believes that we are confronted with a world that is hugely complicated. Still, political and economic conflicts in all societies can be reduced and interpreted as a contradictory relationship between classes (Miljan, 2018). Marx categorizes the causes into two groups regarding their place in production. The two categories include the working class (proletariat) and the capitalists (bourgeoisie). The proletariat is determined by the fact that they do not own or control the means of production. On the other hand, the bourgeoisie is those who control the means of production and the products that come from them (Andrew, 1983). In our case, Kinder Morgan is the bourgeoisie, which one of the largest energy infrastructure companies in North America that specializes in owning and controlling oil and gas pipelines and terminals. However, the workers involved in the field belong to the working-class as they provide labor to the company to earn income.

According to Marxism, the difference in who controls the means of production leads to exploitation in capitalism in the form of wage labor, and the bourgeoisie gets to decide what to do with the profits (Andrew, 1983). In May 2018, the federal government announced a deal to buy the pipeline and expansion project from Kinder Morgan Canada for $4.5 billion. On top of that, Alberta Premier Rachel Notley committed her government would fund another $2 billion to compensate for Kinder Morgan’s unexpected losses resulting from the B.C. government’s opposition. However, the $4.5 billion purchase was just the first down payment on an ongoing series of expenditures. The total cost was estimated to be $15- $20 billion. Finance Minister Bill Morneau stated that it would be a short-term purchase. Besides, the government would return ownership of the pipeline to the private sector when the project was no longer incurring heavy losses (Allan, 2018). Therefore, the Canadian working class shoulders the risk of expenditure through the tax system where the federal government nationalizes the company’s failure.

Marxism also explains that the conflict of this expansion project arose from the unequal distribution of benefits between classes. Capital is driven by making more profits. This simply means that the bourgeoisie will always be looking to make profits as large as possible. The bourgeoisie will also reduce costs by driving down wages and salaries paid to the working class (Andrew, 1983). The government and the bourgeoisie interpreted the expansion of pipeline as a national interest that would generate more high-paying jobs to workers as national interests that Canada is losing $15 billion per year without this pipeline (Allan, 2018). Study shows that even with the completion of the pipeline, those high-paying jobs in Alberta before the oil crisis hit in 2015 won’t return. This is due to advanced automation that involved fewer labors as well as the future market that is affected by climate change. Also, the workers risk facing environmental catastrophe in the event of oil spills.

However, Marx argues that a public policy that generates the general interests of capital should be supported. The reason for this is that policymakers believe that to improve society and make it fairer, there needs to be large-scale change. A project like Trans Mountain is estimated to generate $74.5 billion in increased revenue for producers during the first 20 years of operation. The federal and provincial tax incentives of $46.7 billion from an increase in royalties and corporate income taxes are also expected. Besides, the project is subject to generate $7.4 billion by accessing to higher-priced Asian markets, with 15,000 construction jobs and the equivalent of 37,000 indirect jobs per year of operations will be created locally.

Furthermore, Trans Mountain’s community welfare program is also committed to investing in communities that may be affected by construction. Besides, two policies which include, legitimation polices and accumulation policies, can be used to mitigate interclass conflict. The Legitimation policies aim to reduce the dissatisfaction within the inequalities generated by the capitalist economy. Also, this policy promises to spend all federal revenues from the project in the investment of clean energy and green technology. The accumulation policies are a form of direct support through grants, state expenditure, and laws adjustment on profit-orientated activities. An example indicates the use of such a system is when NEB allows Kinder Morgan Canada to bypass Burnaby bylaws because of its failure to obtain municipal permits from the City of Burnaby.

In summary, Marxism offers excellent ideas for alleviating economic inequality, such as generating more tax revenues as well as financial gains that would benefit everyone in society. However, a significant weakness of Marxism is that it overemphasizes social class as a source of inequality and conflict. Marxism also pays little attention to other sources such as ethnicity, religion, and race. When the state role is increased in every decision, it can efficiently repress individual rights. In our case, environmentalists’ voice can be covered as it opposes to a “national interest” that the project brings.

1. Pluralist

The pluralist model is the view of public policy that recognizes society as a collection of individuals with different interests. Like-minded individuals from different groups maximize their interests and exert influence on government decisions (Miljan, 2018). From this point of view, various actors with their interests have involved in the pipeline controversy. The principal proponents of the TMEP project have been the parent company, Kinder Morgan. Their advantage in access to global markets enables the expansion of oil sands production and the associated increase in revenues and profits. These oil sector interests have been supported by other business groups that are related to the industry, such as construction workers (Trans Mountain, n.d.-b). The government has expressed a variety of interests in the pipelines. The Trudeau government has voiced his support in this expansion as the project will increase the value of Canadian oil by unlocking access to world markets where higher prices are paid for oil while creating employments and tax revenues domestically (Austen, 2018). Theoretically, international and national business confidence is likely to increase support for the government. The Alberta government has been a significant champion of the pipeline expansion, given the importance of the oil sector to the province’s economy and especially the dependence on government revenues from oil. On the contrary, the B.C. government formally took a position against the T.M. project, emphasizing the high probability of a significant coastal accident, the certainty of spills along the pipelines and the hazards of bitumen would carry substantial risks and little benefits to B.C. (Skuce, 2013).

Besides, the new pipeline crosses hundreds of kilometers of unseeded Indigenous land. Although some First Nation communities opened up to the oil sands pipeline and signed an impact-agreement with the pipeline company, others in B.C. see the project as an infringement on their land rights and title. Environmentalists believe that building more pipelines means continued expansion of fossil fuel economy, which would inevitably increase emission. The idea that a net-negative CO2 emissions reduction would somehow salvage the world from the catastrophic climate change is unrealistic at best (Kahan, et al, 2015). As a result of the urgency with which global warming resolutions should be deployed, environmentalists argue that this project is counterproductive for our international and national climate goal to cut 30% of national carbon emission by 2030 on the Paris Agreement (Mcdowell, 2016).

From the pluralist perspective, ethnicity, culture, religion, and economic sector are all critical determinants that influence the outcome of government decisions. Theoretically, by understanding the basis of attitudes and perceptions in each group, the state, and its component can pursue their interests in addition to mediating societal ones (Miljan, 2018). Trudeau’ s government tries to manage this controversial expansion by balancing act on all fronts. Just before approving the Trans Mountain pipeline, he announced a 1.5-billion-dollar investment in marine research and protection and improvements to oil spill cleanup. In practice, however, state action is the outcome of competition among groups that seek to protect the interests of their members. In a race, it’s likely to have dominant groups over the smaller ones. Businesses are accounted for a dominant position in the political marketplace under the pluralist model.

The TM expansion pits some of the most powerful economic interests in Canada against resilient protests defending Indigenous rights and the environments. The report shows that Canada’s equalization funds that flow across Canada depend on sufficient revenues from resources, especially the oil and gas business, as they provide the most surplus in all Canadian export. Alberta contributes $22 billion per year more to Ottawa than it receives in return (Resource Worker Society, 2019). On the other hand, Indigenous people are the minor actors that have less political pressure. In late 2017, six First Nations, along with the cities of Burnaby and Vancouver and two environmental groups, came together to file a court challenge against Kinder Morgan (First Nations, 2019). They hoped to overturn Ottawa’s decision to approve the project by arguing that the government failed to consult them adequately. Unfortunately, the oil companies pose more considerable financial resources and lobbying organizations and greater access than other groups. This has influenced government officials to get the project approved through the process of bargaining and compromise. Canadian constitution states interprovincial pipelines are a federal matter. Therefore, even B.C. opposes the construction; they are unable to control the final ruling. By late 2018, the B.C. government has to move on to restrict any increase in diluted bitumen shipments until it conducts more spill response studies.

In general, Pluralism theory acknowledges the reality of diversity between different groups in the political context and encourages small groups to develop their tactics and strategies by maintaining their interests. The government tries to solve problems and to mediate all conflicts between interest groups and the government. However, this model seems to ignore the reality that there are groups that are dominant over others, and these dominant groups can influence small groups to push forward the pipeline expansion. Consequently, the government does not perform its role as a referee since the dominant group is too strong and could pressure the government, while small interest groups have less contribution and political pressure (Ellis, 1980).

III. Public Choice

The public choice theory believes that individuals are the ultimate decision actors in both the market and the political process. The theory states that the rights and freedoms of individuals should be the foremost concern of government (Miljan, 2018). The pipeline is reframed as a national issue, but it’s local as well from a public choice model perspective. This is because it crosses the property of 2,200 landowners, and each of them has to decide what to do. In Alberta, most people believe that oil power, the country, and all Canadian can benefit from getting it out of the ground. Some towns that border Alberta and some First Nation groups also support the pipeline because of its economic benefits so that they can improve their financial standing. Meanwhile, some other First Nation opposes the project as they believe that it infringes on their sovereignty and rights. Many residents in the lower mainland of B.C. are also troubled by the risks associated with fire and spills, which would have mass destruction of houses in the local vicinity in Westridge Terminal (Stand Earth, 2019). As we can see, each of them has their interests to pursue. To maximize the self-interests, individuals form a group to achieve this purpose. For instance, the local Burnaby residents form an opposing organization like BROKE to prevent the expansion of KMP. Besides, the organization also resents related infrastructure in Burnaby and associated supertanker traffic, through education, advocacy, and partnership to spread their voices (BROKE, 2016).

Under this model, the state is also viewed in terms of individual politicians and bureaucrats who occupy a particular position within it. Politicians, as political entrepreneurs act, align with the rational self-interests (Miljan, 2018). In early 2017, B.C. premier Christy Clark announced her support for the project, saying Kinder Morgan has met five government conditions. However, after approving the controversial site, it angered most environmentalists in B.C. The B.C. Liberals lost a no-confidence vote when NDP Leader John Horgan, who opposed the project, became premier (Timeline, 2019). To fulfill his election promise and maintain himself in power, he took a principled stance in the environmental risks that the project would incur to B.C. Meanwhile, Alberta’s premier Rachel Notley also tried to gain more business confidence to increase support for her party when she went up against Jason Kenney in the next election.

The public choice model shares the same competitive worldview with the pluralist model. However, the model has more focus on controlling resources that can be used as the basis of profitable exchange through continuous competition and bargaining. The B.C. government took a position against the Trans Mountain project, as they carry substantial risks and little benefits to B.C. and refused to authorize the permit to the project. In retaliation for B.C. putting the brakes on the pipeline project, Alberta put a suspension of the embargo on B.C. Wine product (Gillespie, 2018). Alberta Premier Notley declared that Alberta would not sign on to the national climate-change plan until the federal government steps in to assert jurisdiction over the permitting issues with the B.C. government (Premier Rachel Notley, 2018). The Supreme Court later that year ruled the interprovincial pipeline approvals.

Most importantly, the public choice model focuses on the economic efficiency of the project within limits imposed by the information at hand. One of the main reasons for building TMEP is to reduce the need to ship oil to market by rail. Producers pay roughly $10-12/bbl to move their product south by pipeline to refineries while it costs twice as much at $20/bbl or more to make the same trip by rail. The cost of shopping has to be discounted, which means less money is earned on every barrel shipped by rail (Resource Worker Society, 2019). Secondly, the pipeline is a safer choice compared to the railroad to transport crude oil. Not to mention, it generates less pollution per barrel of oil transported. Hence, the expansion of pipeline meets this goal as the benefits to Canadians will increase, and the risks of spills will decrease compared to rail shipment.

Public Choice theory is most concerned with incorporating all self-interested individuals into a policy outcome provided by the government. Under the assumption, the KMPE project would not be carried out as it does not satisfy various individual interests. However, this advantage of inclusion may also hinder the development of the productive forces as it is nearly impossible to take into account everyone’s interests. Besides, the institution in the Public Choice model is seen as individuals who seek to maximize their interests, which could also lead to inefficient Institutions and suppress government entities from developing for the more significant benefit of society (Miljan, 2018).

Conclusion

In summary, this paper has looked at the politics of structure around the Trans Mountain Expansion project. The article has tried to analyze how multiple strategic actors competed for institutional authority from three public policy theories. The theories in this context include the Marxism, Pluralist, and Public Choice. As a government consultant, I believe that the pluralist model is the closest to Canadian institutional settings. This model recognizes that diversity in viewpoints and approaches is crucial to the functioning of society. Besides, diversity makes it possible for unity and individuality to coexist at the same time. I recognize that under this model, the KMEP is likely to be pushed forward as the dominant group controls policy outcomes. However, I would advise the government that the implementation of the project may violate the interests of various organizations, especially those from environmentalists and the local communities. This project should not continue until these conflicts are resolved. I believe the government should fulfill its duty effectively to protect all citizens from risks and dangers to health. The government and its agencies should investigate more on the development of green energy projects and geoengineering projects, rather than continuing to bet on the resource economy.