POLCZER: Any dummy — or Grok/AI — would know Canada would have been billions richer with pipelines

No sh*t, Grok.

It doesn’t take a genius — even an artificial one — to know that Canada would have been nearly half a trillion dollars richer if the Trudeau government had approved the Northern Gateway and Energy East pipelines when it had the chance in 2017.

Add in the Keystone XL to the Gulf Coast and the size of the opportunity cost that was the government of former prime minister Justin Trudeau swells to $50 billion in lost export revenues per year.

And though Canada would still be largely dependent on the US for trade, it would have been in a much stronger position to determine whether the tariff trade war storm would envelop relations between the two countries.

That’s the conclusion of Grok — the AI platform ironically owned by Elon Musk — which is gaining a reputation for giving no-nonsense, unbiased answers to complicated questions without the politically correct algorithms of competitors like Google’s VERTEX, Meta’s Gemini or Microsoft’s Copilot.

(That’s precisely why The Western Standard uses Grok to generate the equivalent of AI editorial cartoons of political leaders — none of the others will.)

So I decided to ask Grokster a relatively simple — and purely hypothetical — question: “What would Canada’s financial picture and dependence on the US trade relationship be like if the former government of Justin Trudeau had approved the Northern Gateway and Energy East pipelines, and Joe Biden had approved Keystone XL to the Gulf of America?”

The answer was both surprising for the depth of reasoning and conclusion. What followed was a 1,200-word analysis that was both plausible and could have been written by a consultant or bureaucrat with a real brain — as opposed to an artificial one.

“If the Northern Gateway, Energy East, and Keystone XL pipelines had been approved under the respective administrations of Justin Trudeau and Joe Biden, Canada’s financial picture and its trade relationship with the United States would likely have seen significant changes, primarily driven by increased oil export capacity and enhanced energy sector growth while acknowledging uncertainties and complexities.”

In short, it could summed up in one word: ‘D’Oh!’

Combined, the pipelines would have collectively added over 2.4 million bpd of export capacity and could have generated an additional $52 billion annually in export revenue (2.4 million bpd × $60 × 365 days.)

Grok’s estimate excludes taxes, royalties, and economic multipliers but highlights the scale of potential financial gains. The construction and operation alone would have created tens of thousands of direct and indirect jobs — upwards of 60,000. 

Increased oil production and exports would have boosted GDP, particularly in Alberta, Saskatchewan, and even New Brunswick. A 2014 Deloitte study estimated Energy East could add $35 billion to Canada’s GDP over 20 years. Northern Gateway and Keystone XL would have added comparable or greater contributions.

Royalties and taxes from expanded oil production would have bolstered federal and provincial budgets, potentially reducing deficits or funding infrastructure, healthcare, or energy transition initiatives, it added.

Higher oil revenues could have alleviated pressure on Canada’s fiscal deficit, which grew significantly under Trudeau’s government (e.g., federal debt rose from $616 billion in 2015 to over $1.2 trillion by 2023). Increased royalties and corporate taxes from the energy sector might have reduced borrowing needs or offset pandemic-era spending.

Expanded pipeline capacity would have reduced the price differential between Western Canadian Select (WCS) and West Texas Intermediate (WTI), which often widened due to transport constraints. 

In 2018, for instance, WCS traded at a $40 discount to WTI, costing producers billions. These pipelines could have narrowed this gap, improving profitability for Canadian oil companies.

Diversified export markets (Asia via Northern Gateway, Europe via Energy East) would have reduced Canada’s exposure to US market fluctuations, enhancing energy sector stability.

The additional tax and royalty revenues could have provided a buffer against economic shocks such as the COVID-19 pandemic, potentially reducing Canada’s reliance on debt financing. 

Eastern Canada would have gained from Energy East by reducing reliance on imported oil and lowering energy costs for industries and consumers.

“This could have improved Canada’s credit rating and lowered borrowing costs.”

Moreover, Northern Gateway and Energy East would have allowed Canada to sell oil to Asia and Europe, reducing the US share of Canadian oil exports. 

“This diversification could have given Canada more negotiating power in trade disputes, such as those during the USMCA negotiations, and insulated it from U.S. policy changes, like Biden’s climate agenda or potential tariffs under a future administration.”

Regarding US trade dependence, Keystone XL would have deepened Canada’s reliance on the American market, while Northern Gateway and Energy East would have diversified exports to Asia and Europe, reducing this dependence and enhancing Canada’s trade resilience. 

The net effect would likely have been a stronger but still US-centric trade relationship, given the deep integration of the North American economy, “but could have given Canada more negotiating power in trade disputes, such as those during the USMCA negotiations, and insulated it from US policy changes, like Biden’s climate agenda or potential tariffs under a future administration.”

In conclusion?

“This scenario assumes stable oil prices, successful project execution, and minimal disruptions from legal or environmental challenges. Real-world outcomes could have varied due to market volatility, policy shifts, or global energy trends,” it cautioned. 

“For further details on current energy trade dynamics, I can search X posts or the web if needed. Would you like me to do so?”

Thanks, Grok, you’ve been helpful enough. We won’t be needing you for much longer. 

Or the present Liberal government after April 28.