Just over a month ago, I wrote a column on the Kitimat plebiscite on Northern Gateway.
I used a CBC interview with Jim Rennie, Mayor of Woodlands Country, and the Alberta Energy Minister Diana McQueen for several responses to the Kitimat vote. And I quoted Mr. Rennie as stating that Woodlands County has many pipelines running through it and they are quite comfortable with the associated risks.
During the interview, Mr. Rennie stated: "we've lived with the risks for decades and we are also quite comfortable with the rewards."
He went on to talk about the low unemployment rates and the lowest tax rates for municipalities in Alberta.
I then quipped: "Yes, things look good at that ends of the pipeline. But it has little to do with the pipelines themselves. His municipality doesn't receive revenue from the pipe in the ground. Rather, the revenue arises from what flows through it.
"It also arises from the jobs that are created in both extracting and processing the petroleum. It is manufacturing jobs at the ends of the pipe that create wealth not the pipe in-between."
While this is not a wholly inaccurate statement (revenue does arise at the ends of the pipeline), it is not wholly accurate either and I owe the Mr. Rennie and the good people of Woodlands County an apology.
It turns out that Woodlands County does receive revenue from the pipelines, pump houses, roadways, and power lines that run through it. These are collectively referred to as "Linear" in the "Bylaw to Authorize the Rates of Taxation ..." Woodlands County has a budget of $42,358,604 of which "municipal revenues and transfers from all sources other than taxation is estimated at $19,785,281 and the balance of $22,586,764 is to be raised by general taxation."
Linear accounts for $7,948,557 of the General Municipal revenue or 18.8% of the overall budget and 47.9% of the General Municipal revenue total. Linear, in Woodlands County, is a big deal and accounts for a sizeable portion of their budget.
I called the Municipal offices in Woodlands County to find out more details about the breakdown of this budget line item and ended up having a conversation with the Mayor himself.
He is a very interesting man to talk to. He is passionate about his county and his province. And he definitely holds the view that the pipelines running through the county are a blessing.
He couldn't give me an exact figure for taxation revenue per kilometre of pipeline nor the amount of revenue that just the pipelines generate as opposed to the power lines or other infrastructure. He said something about the money coming through the provincial government but I am not sure that I heard him right.
In any case, $7,948,557 is a sizeable chunk of the tax bill. Obviously, the pipelines generate a significant income.
Further, given that Woodlands County is home to 4,306 individuals, the money from the Linear tax line represents a benefit of around $1845 per person per year.
So, using this as a model, what should be the benefit to British Columbia for having Northern Gateway transverse the province?
If it is on a per capita basis, and we use the whole province (4,606,371 people), then we should be getting somewhere around $8.5 billion per year. That, I think, would have anyone that was sitting on the fence about the pipeline jumping resoundingly on the side of "YES".
With that sort of money, we could eliminate the PST and properly fund a number of Ministries at the same time.
However, we are not going to get that. Alberta has already declared that it has no real interest in sharing the financial boon that it will receive from Northern Gateway. To put that in perspective, 525,000 barrels per day at $102 per barrel is only $19.5 billion per year. Alberta's cut of that will be $2.7 billion.
No. I don't think that we will see the sorts of money that Albertans see from the pipelines in their province. Besides, in Woodlands County, the tax levy is based on the assessed value of the infrastructure. Linear accounts for $917,275,263 in assessments.
On that basis, if the portion of Northern Gateway in British Columbia has an assessed value of about $5 billion or five times the assessed value of Woodland County's Linear then will see around $40 million per year - five times $8 million is $40 million. At least, that is what Enbridge predicts.
I would suggest that a better deal would be to simply ask for a $2 per barrel tariff. After all, by going through B.C., former Premier Redford says the Alberta oil companies stand to make $20 to $30 more per barrel. What is a couple of dollars more?
At $365 million per year, the pipeline might just generate enough revenue to pay for the clean-up when it breaks.
