Washington State to B.C.'s gasoline rescue?

Washington State Governor Jay Inslee may be called upon by his friend in B.C., Premier John Horgan, to lean on Washington State refiners to provide B.C. with an emergency supply of gasoline and diesel, should Jason Kenney win the Alberta election next week.

Earlier this week, on the campaign trail, Kenney said that his very first act, should his United Conservative Party, win the election next week will be to proclaim Bill 12.

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That’s the bill that arms the Alberta government with a legal mechanism to control exports – specifically, petroleum exports.

It's whole raison d’etre is to punish B.C. for what Kenney and current Premier Rachel Notley view as obstructing the expansion of the Trans Mountain pipeline.

“Within an hour of being sworn in, we’ll hold a cabinet meeting and proclaim into law (Bill 12) the turn off the taps legislation,” the Medicine Hat News reported him saying at a rally in Medicine Hat Monday, April 8.

The bill would be used to cut off or otherwise throttle back on the flow of petroleum products to B.C. – something the B.C. government has admitted in a court affidavit could result in “civil unrest,” since B.C. relies on Alberta for about 85% of its oil and refined fuels, including jet fuel.

There is some question whether the law is constitutional, and the B.C. government has a legal challenge to it ready to go, should Alberta try to use it.

But B.C. has made attempts of its own to restrict the flow of oil on the Trans Mountain pipeline. In B.C.’s case, it has asked the courts for a ruling on whether it has the authority to restrict the flow of one type of oil – diluted bitumen.

So while it argues that Alberta’s attempts to restrict oil exports is unconstitutional, it simultaneously argues that its attempts to restrict oil imports isn’t.

Alberta’s Bill 12 was created by the Rachel Notley NDP government. It was designed specifically to cut off or otherwise throttle back the supply of oil and refined fuels to B.C., and possibly to other provinces seen to be obstructing Alberta’s attempts to get pipelines built.

Although the bill received royal assent in May 2018, it was never formally proclaimed. So when the B.C. government tried to have the bill struck down, an Alberta judge in February said its application was premature, since the bill wasn’t officially proclaimed yet.

Kenney said he would immediately proclaim the bill. Once proclaimed, B.C. would be able to resubmit its application to have it struck down.

Last week, Business in Vancouver asked Horgan if B.C. has a contingency plan, should Kenney win the election and make good on his threats to cut B.C. off of Alberta oil and gas. He suggested Washington State might come to B.C.'s rescue.

“I’ve been developing relationships with Jay Inslee, the governor of Washington,” Horgan said. “A lot of refining capacity just south of the border in Washington State.

“They depend on natural gas from B.C. to fire up their refining capacity. So there’s a relationship that’s economic, as well as one that’s social and cultural between Washington and British Columbia.

“With respect to Mr. Kenney’s comments, I don’t know if that’s how you build relationships.”

The problem with B.C.’s contingency plan, however, is that Washington refineries may have little refined fuels to spare. The entire Pacific coast is constrained by limited refining and pipeline capacity.

An even bigger problem might be that about 150,000 barrels per day of oil that Washington refineries use comes from Alberta, via the Trans Mountain pipeline, which branches off to the Puget Sound pipeline.

If Kenney can use Bill 12 to restrict the flow of oil and gasoline to B.C., he might also be able to use it to control the flow of oil to Washington State, although that could trigger an international trade dispute.

When Bill 12 was passed, Notley said it was aimed at fixing the problem of Alberta oil producers not having enough pipeline capacity, and B.C.’s attempts to stop the Trans Mountain pipeline expansion.

She suggested that exports of refined fuels could be moved off the Trans Mountain pipeline to allow for increased movement of crude oil for export. That would force refined fuels like gasoline, diesel and jet fuel to have to move to B.C. by truck or rail, which would increase the cost.

Notley recently said she thinks the federal government will again approve the Trans Mountain pipeline expansion by the end of May.

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