B.C. premier pushes back against Alberta's threat to turn off taps

B.C. Premier John Horgan says an expanded Trans Mountain pipeline is no guarantee of lower gas prices and the current spike in Lower Mainland fuel costs is not his fault.

Horgan reacted to threats from Alberta Premier Jason Kenney who says he will use a new provincial law to cut off gas to B.C. if the premier keeps blocking oil projects and driving up the price of gas.

"The travelling public cares not whose finger is pointing where. They want prices to come down," said Horgan on Wednesday, adding he's working with Ottawa to try to reduce the export of diluted bitumen and increased refined product.

He urged Alberta to work with B.C. on this.

Horgan said he spoke to Kenney late Tuesday and both agreed they'd continue to protect their provincial interests and had a "few good laughs," but they disagree that twinning the Trans Mountain will necessarily deliver cheaper gas.

Horgan said there's no promise that any new capacity in the pipeline would be used for more batches of consumer-ready gas, as there's no hint of that in the current proposal before the National Energy Board.

He said the flow of crude, not refined gasoline, has recently increased.

Horgan said he plans to remain "reasonable" and avoid rhetoric. But he refused to take the blame for spiking prices at the pumps or to apologize for fighting Alberta's bid to "impair trade" between B.C. and Alberta by fighting its new "turn off the taps" law in court.

Horgan didn't get any more specific about next steps in the escalating word war between the two provinces.

"When you are playing poker you keep the cards in your hands," said Horgan.

Earlier Wednesday, Kenney said B.C.'s obstruction of his province's oil and gas industry — specifically the blocking of the Trans Mountain pipeline expansion — was the reason for gas prices topping $1.70 per litre in Metro Vancouver.

He then threatened to use the newly proclaimed law to prod B.C. into approving the Trans Mountain project. 

Shortly after Kenney's comments, lawyers for B.C. filed legal paperwork signaling plans to fight Alberta's law on grounds that it's unconstitutional.

Industry analysts and legal experts say the law is a bluff and more pipelines are not guaranteed to cool the punishing prices at the pump.

They say soaring gas prices are caused by a combination of factors, from the 32 cents-a-litre tacked onto Metro Vancouver gasoline to a lack of supply — and of course, profits.

But Kenney says the high prices are Horgan's fault.

He stood beside his new energy minister Wednesday, warning that he's ready to use newly enacted "turn off the taps" law at any moment.

"We are serious about it. This is not some bluff. We will protect the value of Alberta's resources," Kenney said during a news conference Wednesday. When asked why he hasn't begun screwing shut those taps, he explained that he's agreed to talk further with Horgan.

But he said the fix is simple: Greenlight the Trans Mountain expansion.

"We don't have enough pipeline capacity to ship both refined gas and unrefined bitumen to the Lower Mainland," Kenney said.

Supply crunch

Gas industry analysts are not so sure. They say B.C.'s high gas prices are driven by a combination of taxes and a lack of refinery capacity, which, it has been argued by B.C. Green Party Leader Andrew Weaver, might actually get worse if the Trans Mountain pipeline were twinned.

It's important to remember that Trans Mountain only carries a limited amount of consumer gasoline and diesel alongside crude oil that must be refined, analysts say.

"Pipeline or no pipeline, it doesn't change the supply or availability of gasoline without a change in refining capacity," said Mason Hamilton, a petroleum markets analyst with the US Energy Information Administration.

As for Kenney's promise to cut off the supply altogether, legal and political experts question whether that will happen.

Alberta's new law would face a challenge from this province and fail, said Joel Bakan, a constitutional expert with the University of B.C.

Bakan said that there are provisions in the law to prevent provinces from cutting off critical resources to each other — especially as political leverage.

Others describe the legal showdown as a sideshow.

University of Alberta political scientist Jared Wesley said the law is more of a political tool.

"They are picking a fight and they look good whether the courts hold it up or not. They look like they are standing up for Alberta's interest ... a lot of this is posturing," he said.

"An action taken by an energy minister to actually stop shipment to B.C. would be the constitutional and intergovernmental equivalent of a nuclear weapon and I don't think the Kenney government is in the mood to go that far."