Bob Simpson: LNG snake oil for B.C.’s economic woes

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Forestry, mining, and agriculture all made cameo appearances in this week’s throne speech, but liquefied natural gas (LNG) had the starring role.

According to the premier, over the next 30 years, taxes and royalties from LNG will allow B.C. to pay off the provincial debt, get rid of the provincial sales tax, and fund improved social services. This will supposedly be accomplished by setting up a “Prosperity Fund” consisting of natural gas royalties. The money in this fund could then be used to smooth out the boom and bust of our natural resource economy, allowing the government to achieve its fiscal goals with more consistency and certainty.

A rainy-day fund topped up from B.C.’s natural-resource revenues is a great idea, and I’ve argued for such a fund myself, but there are a few problems with the Liberals’ proposal:

1) This fund won’t be in place until 2017. That’s two elections from now!

2) Investing in LNG as the Liberals suggest will be bad for B.C.’s environment. Increasing our reliance on LNG means rapidly depleting a nonrenewable resource, permanently toxifying trillions of litres of fresh water every year, increasing the fragmentation of our land base, and releasing massive amounts of greenhouse gases into the atmosphere. These emissions will ensure we break B.C.’s law requiring us to reduce GHG emissions by 80 percent by 2050.

3) It’s hard to take seriously the idea that B.C. will receive billions in additional natural gas revenue over the next 30 years. This government hasn’t been able to project natural gas revenue correctly in any of the last 10 budgets. The 2009–10 revenue from natural gas was projected to be $1.7 billion in 2007, $1.3 billion in 2008, and $522 million in the 2009 budget. Actual revenue collected in 2009–10: $464 million.

4) B.C. will be far too late into the Asian market to benefit from pricing premiums, which means that British Columbians will most likely end up subsidizing the industry instead of benefitting from it. We’ll also end up paying higher domestic prices for our own natural gas to boot.

Anyone paying attention to the unfolding saga of the global rush to export LNG to Asia knows that the premier’s 2017 LNG cure-all is snake oil, and nothing more. I pity the Liberal MLAs and candidates having to make promises for 2017 while they’re still fighting the 2013 election.

Bob Simpson is the independent MLA for Cariboo North. 

Comments (7) Add New Comment
Harcourt Fenton Mudd
One thing that is sure about any economic forecast is that it will be wrong. It is at best an educated guess. Recall the predictions and assumptions that the Alberta-hated National Energy Program was based on were toast within six months of the plan's announcement. So, Christy Clark thinks that since she called off a fall session so she and her crew could wouk full-time on a desperate re-election strategy now means she can predict 30 years into the future? Really, what a fairy tale!

Remember the fleeting promises and disastrous results of the North-East coal project...
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James
#4 is dead on, this will make domestic prices higher, and raise what my family pays for energy here. Its not about accessing foriegn markets as mush as raising the domestic price.
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PJ
And yet you elect these people as they promis the world when they know it wont collect till the end of their term,then they can blame someone else.And here we go again about green house gases,isnt LPG the cleanest burning fuel?,What else are you going to generate power with since you dont want another dam.Heat your house with?,cook with?You would need to install hundreds of wind mills and solar panels to provide enough power for a few houses what about the rest of Vancouver and province.
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MWRobin
So the BC government should be able to guess the price of gas and hence the royalty from gas in the future?

Bob Simpson is lamenting a lack of a crystal ball by the government.

I am sure Bob's government (if ever there is one) will be able to forecast the price of gas into the future, and hence play the commodities market, and make billions, and eliminate taxes altogether.

With intellects like Bob Simpson, he should be our next Premier (sarcasm).
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Abby House
Oil LNG all amount to the same thing: enriching the rich and impoverishing the poor.
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PJ
RE abby And what pray tell do you think employs thousands of workers in every field of trade.The rich have to lay out billions to start explorations that somtimes dont pay off.With no rich people there would be a lot of poor,and no one to pay taxes,etc.
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MWRobin
@Abby House -- The oil corporations are mainly owned by pension funds, insurance companies, funds managers, and individuals with a few hundred shares.

Your leftwing public-sector urban myth that corporations are owned by a few rich guys is counterfactual and conspiracy mongering.
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