Two obvious but generally unstated details about the Enbridge Northern Gateway Pipeline are climate change and that oil and gas companies stand to make mega-profits. An honest appraisal of the project would be something like, "yes, putting in the pipeline will facilitate even more greenhouse gas emissions from the Alberta oil sands, but our buddies stand to make bucketloads of cash." Of course, proponents cannot say that so they have to resort to bullying and name-calling to disguise the indefensible.
The two, climate and profit, are very much related. The gains from doing this are "odious profits" that exist only because of massive costs externalized onto third parties (I'm riffing off the term "odious debt" -- that incurred by dictators, usually for military hardware, for which the people are forced to pay even after the dictator has been deposed). Anyone who advocates well-functioning markets, as opposed to unbridled capitalism, should see the logic of ensuring that all costs of production are captured in the market price. The huge negative externality associated with fossil fuels is what prompted Nicholas Stern to call climate change the biggest market failure in history.
How much are we talking here? The pipeline itself is a $5 billion investment so it will have to make back a decent annual return. Enbridge's estimates for toll structure and throughput imply revenues of just under $900 million per year. Based on financial statements in Enbridge's 2010 Annual Report, profits from pipeline operations (after-tax earnings plus dividends) averaged 34 per cent of revenues over the past three years. At this rate, profits from NGP would be over $300 million per year. These are not trivial amounts, and they do not include "costs" such as lucrative executive compensation -- for example, Patrick Daniel, the CEO of Enbridge, made more than $6 million in 2009, and several other executives had more than $1 million in compensation.
The two, climate and profit, are very much related. The gains from doing this are "odious profits" that exist only because of massive costs externalized onto third parties (I'm riffing off the term "odious debt" -- that incurred by dictators, usually for military hardware, for which the people are forced to pay even after the dictator has been deposed). Anyone who advocates well-functioning markets, as opposed to unbridled capitalism, should see the logic of ensuring that all costs of production are captured in the market price. The huge negative externality associated with fossil fuels is what prompted Nicholas Stern to call climate change the biggest market failure in history.
How much are we talking here? The pipeline itself is a $5 billion investment so it will have to make back a decent annual return. Enbridge's estimates for toll structure and throughput imply revenues of just under $900 million per year. Based on financial statements in Enbridge's 2010 Annual Report, profits from pipeline operations (after-tax earnings plus dividends) averaged 34 per cent of revenues over the past three years. At this rate, profits from NGP would be over $300 million per year. These are not trivial amounts, and they do not include "costs" such as lucrative executive compensation -- for example, Patrick Daniel, the CEO of Enbridge, made more than $6 million in 2009, and several other executives had more than $1 million in compensation.