https://socialistaction.org/2018/05/29/kinder-morgan-should-canadian-taxpayers-invest-in-a-bailout/
Kinder Morgan: Should Canadian taxpayers invest in a bailout?
/ 12 hours ago
June 2018 pipeline (Chris Helgren:Reuters)
Protest against the Trans Mountain Pipeline. (Photo: Chris Helgren /
Reuters)
By GARY PORTER
On May 29, Canada’s federal government announced that it would purchase
the Trans Mountain Pipeline from the American corporation Kinder
Morgan—despite opposition from environmentalists and Indigenous people.
“The Trans Mountain expansion project is of vital interest to Canada and
Canadians,” Bill Morneau, the finance minister, told reporters after a
cabinet meeting to discuss the deal. “Our government’s position is
clear: It must be built, and it will be built.” An earlier article
follows below.
Prime Minister Trudeau has instructed Finance Minister Bill Morneau to
begin discussions about a bailout of Kinder Morgan’s Trans Mountain
pipeline project from the Alberta Tarsands to Burnaby BC for the purpose
of exporting bitumen to foreign markets.
Kinder Morgan announced on April 8 that it had stopped all essential
work on the project, citing delays and risk associated with sustained,
legal, economic and political opposition. Trudeau’s eagerness to invest
in the $7.4 billion CAD is seen by pipeline proponents and critics alike
as a “terrible idea.”
Kinder Morgan reports it has already invested 1 billion in the project.
Trudeau argues the bailout is in the “national interest” but offers no
evidence to show how taxpayers would benefit from pouring their dollars
into a profitable mega corporation based in the United States. It seems
obvious how KM shareholders and bosses would benefit.
Let’s do a little due diligence before putting a nickel into this
massive corporation. Firstly, it is in the business of providing
transmission infrastructure for the oil and gas companies to move
product to refineries and to consumers. This business is the most
destructive of the global environment. Secondly, Texas billionaires
Richard Kinder and Bill Morgan, formerly of the massively corrupt and
crooked Enron Corporation, built this business out of an Enron subsidiary.
Kinder Morgan’s management team, to this day, contains many prominent
former Enron executives. Their business has an interest in or directly
operates 137,000 kilometres of pipeline and 152 terminals
Kinder Morgan (KM) is a major borrower. It operates at a risky rate of
1/3 of its assets financed by debt. It has a reputation of running on
the cheap. Hedgeye Risk Management on Wall Street accused the company of
installing cheaply built pipelines, and underspending on maintenance and
safety technology. For example, they are unwilling to provide British
Columbia a guarantee of even a 24-hour response to oil spills in the
province.
At the 2014 National Energy Board hearing in Ottawa, KM said it would
provide 100 per cent of the financing for Trans Mountain. As oil prices
fell it failed to find credit or a joint venture partner. The job of
raising funds was shoved onto KM Canada. KM Canada raised $1.6 billion
in an offering in 2017, but in true Enron fashion this money was taken
by the US corporation to pay off its debts, rather than to finance the
Canadian project.
Meanwhile, KM Canada has been extremely busy lobbying 19 different
agencies to get technical tax changes for its benefit, support for
increased tanker traffic, and support for its pipeline. KM has a history
of paying little or no tax, just like Enron. In 2017, for example, they
paid zero tax in Canada. Over the past three years their tax rate has
been less than 1%. So, they contribute nothing to Canadian taxpayers,
but seek a bailout.
One of the major benefits of such intense lobbying is that the NEB
allowed only KM to increase pipeline tolls from $2.50 a barrel to $5.90
a barrel generating a cool billion annually in pipeline traffic in
Canada. For BC especially, this means permanently high gas pump prices
and the siphoning off of $100,000,000 annually from the BC economy to
the benefit of this huge US dirty oil business. BC residents would pay
the cost of the pipeline through higher gas and heating oil prices.
In the U.S., since 2000 KM has been hit with fines totalling
US$162,000,000, with many cases still in progress, and no doubt, more to
come. These involve repeated violation of environmental laws, energy
market manipulation (just like Enron), pipeline safety violations and
labour violations.
Incidentally, but importantly, eight Canadian institutional investors
own $2 billion in KM. Sadly, both from an ethical perspective and from a
prudent investment perspective, one of them is the Ontario Teachers’
Pension fund. It likes investing in a Trump enterprise. OTP, you should
know better. You are going to get screwed. Richard Kinder, by the way is
said to be worth $8 billion, enough to pay for the pipeline himself.
Not a single dollar of taxpayer money should be invested in this
company. This project is crooked from start to finish. Stop the pipeline
and throw KM out of Canada. Nationalize and operate its assets as part
of a democratically developed plan to rapidly reduce oil dependence and
build a green energy infrastructure instead.
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May 29, 2018 in Canada, Environment.
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