Canada Tax Payers On The Hook For $30 Billion Controversial Oil Pipeline

[Economy 42,056]

https://www.bnnbloomberg.ca/cost-of-trans-mountain-expansion-balloons-to-30-9b-1.1893970

 

A controversial pipeline (transmountain pipeline) in Canada was originally cancelled by the company building it citing too much regulatory uncertainty and delays...

 

The Federal Government of Canada ended up buying the pipeline for around $5 Billion to ensure it got finished with plans to sell it back to the private sector and Hopefully for a profit with original total construction cost estimated at no more than $12.6 Billion

 

Instead a perfect storm of factors gone wrong has essentially guaranteed the government will never recoup the money it spent to buy it and construct it at the cost of tax payers.

 

Many of the issues gone wrong include:

 

- Labor Shortages (raising cost of labor and also making project take longer to complete)

- Covid-19 restrictions and safety protocols to keep workers safe increased costs and decreased productivity

- floods at construction sites causing damage and delays... Other bad weather also delayed construction 

- court legal challanges by those opposed creating legal costs and delays in construction

- building materials shortages and high inflation raising cost of nearly all materials especially steel 

 

With virtually everything that could to wrong having gone wrong, the price tag of the project first got increased to $21 Billion but is now nearly triple the original projections at $30.9 Billion

Edited March 12 by Economy

[Economy 42,056]

I'm kinda 50-50 on this...

 

In terms of the pipeline expansion itself... I think we should stop expanding oil pipelines and just work with what we already have considering the need for transition away from fossil fuels

 

However in terms of a bad financial investment for tax payers, I won't be too harsh on Trudeau given the stuff gone wrong couldn't have been predicted and was just a lot of bad luck tbh 

 

No one could have predicted the covid-19 disruptions to both labor and supply chain disruptions and inflation to building materials. Also bad weather is also always a risk in construction but u cannot predict how much weather that is bad enough to hinder construction (or cause damage) you will get if any 

 

Edit: @PartySick with 1/9 the population and 1/10 the economy, Canada wasting $30B is like the US wasting $300 Billion.

 

Make u feel better about Florida yet?

Edited March 12 by Economy

[thierryrreiht 19,283]

It should’ve never been bought in the first place. A lot of people said it was not a good financial idea, but a slap in the face for the environmental progress over the last decade. 
 

For $30 billions we could have a high speed rail (or almost all paid for). Instead we have this disaster.

[Economy 42,056]

8 hours ago, thierryrreiht said:

It should’ve never been bought in the first place. A lot of people said it was not a good financial idea, but a slap in the face for the environmental progress over the last decade. 
 

For $30 billions we could have a high speed rail (or almost all paid for). Instead we have this disaster.

It wasn't the best environmental move I agree... But from an investment perspective, no one could of predicted this

[TortureMeOnReplay 3,961]

You know the saying "if it sounds too good to be true, it probably is"? I would like to propose "if it sounds too American, it probably is". This sounds like something that would happen in the US (and probably does). If a private company doesn't think the risk is worth it and they don't immediately sell to another private company, what makes government, with its beauracracy, think it will make a profit? It sounds like special interest government officials bailed out a company and now the public gets the bill. 

[Economy 42,056]

7 minutes ago, TortureMeOnReplay said:

You know the saying "if it sounds too good to be true, it probably is"? I would like to propose "if it sounds too American, it probably is". This sounds like something that would happen in the US (and probably does). If a private company doesn't think the risk is worth it and they don't immediately sell to another private company, what makes government, with its beauracracy, think it will make a profit? It sounds like special interest government officials bailed out a company and now the public gets the bill. 

Well I don't think in this case the economic risk or profitability was the problem remember all this stuff started going wrong (that no one could of predicted) from covid onwards and that's what ballooned the cost of the project.

 

The only risks and cost increases that originally were there was the fact that many groups were trying to stop the pipeline and constantly throwing it in court and forcing construction to start and stop at locations while at the same time there was an increasing political risk some governments (especially British Columbia) might block the project entirely so they were spending money on a pipeline that in the end they may not get to finish at all

 

But the economics of the project I think we're sound originally (again excluding environmental factors, talking pure economics for this part of the argument)

 

But no one could of predicted the amount of labor and material delays from covid and that the weather was gonna be so exceptionally bad right on the points that were in construction at the time. I think it was pure bad luck tbh. Everything that could possibly go wrong with the construction phase of this pipeline has gone wrong

 

It should be noted the $30B tax payers are on the hook for will technically shrink by the end of this. Analysts think the pipeline is worth a minimum of $10B which it can be sold for reducing losses to $20B. Also I think these figures include the original few billion that the company spent starting the project so that part wasn't really spent by government... Also this will improve Canada's oil price discount so it will increase tax revenue from oil companies as their profits increase

 

Even so, I'm sure the actual losses at the end of the tunnel will still be in the several billion