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Old 01-21-2021, 01:46 PM   #4521
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Is anyone surprised? He'll say anything to pander to an audience. He works a room, and then does whatever he has to do to appear like a tough guy. Problem is like any politician he has no problem going back on his word and defending it like it was "all part of the plan".

He's basically flying by the seat of his pants, pretending like it there's some semblance of competency, all while playing loose and fast with the future of this province.

#### him and the blue pickup he rode in on.
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Old 01-21-2021, 01:58 PM   #4522
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On what basis do you disagree? I would appreciate some thoughtful discussion rather than the one liner responses that have unfortunately become typical here.

A cursory analysis would indicate that, at a 10% chance of success, the $1.5 billion is a positive NPV project to the government:

- Estimated $538 billion in additional GDP to Alberta over a 25 year period. This is overly optimistic, so let's be conservative and revise down by 30% to $376 billion or $15 billion per annum.
- Provincial government revenue is ~14% of GDP, so the project should contribute an additional $2.08 billion p.a. to government coffers.
- Over 25 years, that's a present value of $24.2 billion (@7%)
- At a 10% probability, the expected value is $2.4 billion on a $1.5 billion investment.

Anything I'm missing here?

I can understand the criticism of the government having to invest into what should be a private sector venture, however the alternative of having let KXL die when there was still a realistic chance of it going ahead would have signaled a lack of government confidence in our energy sector and been a major mistake.

There's also the possibility that Biden is a one term president and this thing comes back from the dead again - who knows?
I think the thing you're missing is that a 10-month delay would have saved us this $1.5B or, in the scenario where Biden didn't cancel it, would not have resulted in the Keystone XL not being built. The choice wasn't pipeline or no pipeline, the choice was the timeline.

In a perfect world, the $1.5B paid off and the pipeline was completed in 2023.

In a realistic alternative world, the government waits 10 months, Biden doesn't cancel the pipeline, and they then invest the $1.5B for completion in 2023+10 months.

In our current world, the government knew Biden planned to squash it long before the investment was made, and still invested $1.5B in an attempt to quicken the timeline of a project that was dependent on an election which was already slated towards the person wanting to squash it.

So best-case scenario, we gambled $1.5b to get a 10-month timeline gain on a project. Does that seem like a wise gamble to you?

Even in the scenario where Biden is a one-term President and KXL starts back up in 4 years, it changes nothing in regards to the money being wasted. It's gone, and the reason it was spent is shot.
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Old 01-21-2021, 02:14 PM   #4523
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I think the thing you're missing is that a 10-month delay would have saved us this $1.5B or, in the scenario where Biden didn't cancel it, would not have resulted in the Keystone XL not being built. The choice wasn't pipeline or no pipeline, the choice was the timeline.

In a perfect world, the $1.5B paid off and the pipeline was completed in 2023.

In a realistic alternative world, the government waits 10 months, Biden doesn't cancel the pipeline, and they then invest the $1.5B for completion in 2023+10 months.

In our current world, the government knew Biden planned to squash it long before the investment was made, and still invested $1.5B in an attempt to quicken the timeline of a project that was dependent on an election which was already slated towards the person wanting to squash it.

So best-case scenario, we gambled $1.5b to get a 10-month timeline gain on a project. Does that seem like a wise gamble to you?

Even in the scenario where Biden is a one-term President and KXL starts back up in 4 years, it changes nothing in regards to the money being wasted. It's gone, and the reason it was spent is shot.
I disagree. I think that it would've been canceled if Alberta Gov didn't step in - ie. no additional work being done or private funding.

That 1.5B paid the salaries of many welders, laborers, inspectors, project managers and engineers for 9 months. Even though the investment didn't result in future gains, the spending itself was economic stimulus in a time when it was sorely needed.

With the benefit of hindsight, we basically had the equivalent of the broken window fallacy for jobs, but is it any different than subsidizing any other group of workers?

Last thing, the decision to invest was in March 2020, while Biden's announcement regarding canceling it was May 2020. During the primaries, Biden made no indication he would bow that far to the progressive wing.
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Old 01-21-2021, 02:26 PM   #4524
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I disagree. I think that it would've been canceled if Alberta Gov didn't step in - ie. no additional work being done or private funding.

That 1.5B paid the salaries of many welders, laborers, inspectors, project managers and engineers for 9 months. Even though the investment didn't result in future gains, the spending itself was economic stimulus in a time when it was sorely needed.

You are also basically arguing in favor of handouts for pipeline workers (about 2000-3000 as far as I can recall) to build a road to nowhere. How would you say this was good when CERB was supposed to be there for out-of-work people to pay the bills? Even the UCP was telling Canadians to take advantage of CERB and also taking advantage of emergency funds for their own party (only political party in the country to do so).

$1.5 Billion should have been used to teach Alberta how to fish, rather than buy a fish.
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Old 01-21-2021, 02:28 PM   #4525
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Originally Posted by PepsiFree View Post
I think the thing you're missing is that a 10-month delay would have saved us this $1.5B or, in the scenario where Biden didn't cancel it, would not have resulted in the Keystone XL not being built. The choice wasn't pipeline or no pipeline, the choice was the timeline.

In a perfect world, the $1.5B paid off and the pipeline was completed in 2023.

In a realistic alternative world, the government waits 10 months, Biden doesn't cancel the pipeline, and they then invest the $1.5B for completion in 2023+10 months.

In our current world, the government knew Biden planned to squash it long before the investment was made, and still invested $1.5B in an attempt to quicken the timeline of a project that was dependent on an election which was already slated towards the person wanting to squash it.

So best-case scenario, we gambled $1.5b to get a 10-month timeline gain on a project. Does that seem like a wise gamble to you?
The scenario you're presenting is fantasy. Given the amount of cash burn on this per day, why would TC keep this alive without certainty of government investment?

The investment was announced when it was because risk levels had become too high for TC to continue burning capital on it, thus requiring the government injection to keep the project going.
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Old 01-21-2021, 02:33 PM   #4526
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Imagine losing the value of THREE 'superlabs', a project that Tyler Shandro called “expensive and disruptive” and “ideologically driven” by the NDP, through a gamble of taxpayer dollars that could be described as "expensive and disruptive" and "ideologically driven" by the UCP.
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Old 01-21-2021, 02:35 PM   #4527
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I disagree. I think that it would've been canceled if Alberta Gov didn't step in - ie. no additional work being done or private funding.

That 1.5B paid the salaries of many welders, laborers, inspectors, project managers and engineers for 9 months. Even though the investment didn't result in future gains, the spending itself was economic stimulus in a time when it was sorely needed.

With the benefit of hindsight, we basically had the equivalent of the broken window fallacy for jobs, but is it any different than subsidizing any other group of workers?

Last thing, the decision to invest was in March 2020, while Biden's announcement regarding canceling it was May 2020. During the primaries, Biden made no indication he would bow that far to the progressive wing.
Actually you're right on the timeline, I'm wrong. I remembered Biden being a part of the No KXL Pledge in 2019 but that's not true.

And it's fair to say that money in part went to paying wages of workers who otherwise would have been out of a job. But given that, we should also recognize that all of that money could have been spent that way, and all of it could have been better spread in a way that helped more Albertans instead of less.

I just think that if we're calling it a pipeline investment, it was a risky and foolish gamble, and if we're calling it economic stimulus for workers, it wasn't effectively spent.
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Old 01-21-2021, 02:35 PM   #4528
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So if risk levels were too high back in March when Trump was President and the Republicans controlled the Senate, how was it a good bet when the optimistic outcome was Trump being President and Republicans controlling the Senate?

What were they betting on that made the risk less than back in March?
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Old 01-21-2021, 02:40 PM   #4529
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Originally Posted by Zarley View Post
The scenario you're presenting is fantasy. Given the amount of cash burn on this per day, why would TC keep this alive without certainty of government investment?

The investment was announced when it was because risk levels had become too high for TC to continue burning capital on it, thus requiring the government injection to keep the project going.
Which scenario? I presented multiple.

Would Keystone XL be the first project or business to pause during the pandemic? Do we think this isn't happening elsewhere in other industries?

And, should that investment not have come, TC Energy paused the project, and Trump been re-elected, the validity of the project intact, that it just... wouldn't have come back online?

I don't know of a single reputable source that claimed the investment was to avoid the non-existence of the pipeline entirely. Worst case scenario, it would have been a large delay. Do you have anything to back up it being permanently dead if not for the investment?
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Old 01-21-2021, 02:44 PM   #4530
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I disagree. I think that it would've been canceled if Alberta Gov didn't step in - ie. no additional work being done or private funding.

That 1.5B paid the salaries of many welders, laborers, inspectors, project managers and engineers for 9 months. Even though the investment didn't result in future gains, the spending itself was economic stimulus in a time when it was sorely needed.

With the benefit of hindsight, we basically had the equivalent of the broken window fallacy for jobs, but is it any different than subsidizing any other group of workers?

Last thing, the decision to invest was in March 2020, while Biden's announcement regarding canceling it was May 2020. During the primaries, Biden made no indication he would bow that far to the progressive wing.
I agree it would have been cancelled if the AB Gov't didn't step in. And it's cancelled now, even with the AB Gov't stepping in and we're a billion and a half dollars poorer. The investment community didn't want anything to do with Keystone because they saw the writing on the wall unlike AB.
You might say that was the same for TMX, but the key difference is that the Federal Gov't had the ability to mitigate the risk, unlike the investment community. In this case, we didn't have that ability because like everyone else, we were relying on the US.

And if keeping people working is the best thing that came out of this it would certainly have been more effective to just cut out the middle man and pay the workers directly or put them to work doing something that was actually productive.

Last edited by Torture; 01-21-2021 at 02:50 PM.
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Old 01-21-2021, 02:54 PM   #4531
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Because it's gambling. A 90% chance of failure is far to high. If it was a 90% chance of success I'd feel differently. I'd probably raw the line somewhere around 70% chance of success for that dollar value of risk.
Ah, "it's gambling" - it seems to me that your opinion on this is based on emotion rather than rational analysis of the project as a capital investment to the government. Every investment project is a gamble in some way.

Yes - I would agree that the government should not typically be investing in what should be private sector projects. This is a special case, given the scale of what this additional export capacity would mean for the Alberta economy.

There's no significance to the 10 percent figure, that was simply thrown out to illustrate that the expected return is positive even at a minimal probability of success - such is the scale of the positive benefit to the economy. In any case, the election odds were closer to 50-50 at the time this was announced. Does that change your calculus?
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Old 01-21-2021, 03:00 PM   #4532
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Is the 1.5 billion lost yet?

I assume that their will be NAFTA based lawsuits on the changing of regulations by the government incurring damages.

Unless we are factoring the expectation value of lawsuit proceeds itís a little premature to say the government lost 1.5 billion plus loan guarantees. Also do we have a final number on the incurred expenses up to yesterday.

It will take a few years before we know the outcome of Kennyís investment.
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Old 01-21-2021, 03:09 PM   #4533
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You are also basically arguing in favor of handouts for pipeline workers (about 2000-3000 as far as I can recall) to build a road to nowhere. How would you say this was good when CERB was supposed to be there for out-of-work people to pay the bills? Even the UCP was telling Canadians to take advantage of CERB and also taking advantage of emergency funds for their own party (only political party in the country to do so).

$1.5 Billion should have been used to teach Alberta how to fish, rather than buy a fish.
It ended up being a pipeline to nowhere but that wasn't the case at the time. It's better than CERB because it actually had the potential to give us some real gains, compared to CERB which was a handout to not even build anything at all.

Basically, my position is that the 1.5B in the best case was a huge gain for the Albertan economy. In the worst case, it's CERB for a number of people.
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Old 01-21-2021, 03:17 PM   #4534
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Actually you're right on the timeline, I'm wrong. I remembered Biden being a part of the No KXL Pledge in 2019 but that's not true.

And it's fair to say that money in part went to paying wages of workers who otherwise would have been out of a job. But given that, we should also recognize that all of that money could have been spent that way, and all of it could have been better spread in a way that helped more Albertans instead of less.

I just think that if we're calling it a pipeline investment, it was a risky and foolish gamble, and if we're calling it economic stimulus for workers, it wasn't effectively spent.
I disagree with your assertion that it was a foolish gamble. From my point of view, TC was in a spot similar to Kinder with TMX. They were no longer willing to go forward. Without AB investment, the project was dead - not postponed, but dead. We can only speculate who's right, because investors can only guess, and TC executives will only say what they are trained to say.
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Old 01-21-2021, 03:20 PM   #4535
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Given the income tax rates, the money helped boost Alberta’s fiscal capacity and funnel more tax dollars to the feds that can be used for equalization.
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Old 01-21-2021, 03:23 PM   #4536
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I disagree with your assertion that it was a foolish gamble. From my point of view, TC was in a spot similar to Kinder with TMX. They were no longer willing to go forward. Without AB investment, the project was dead - not postponed, but dead. We can only speculate who's right, because investors can only guess, and TC executives will only say what they are trained to say.
I don't know. 12 years of history with plenty of turmoil, roadblocks, lawsuits, protests, etc. etc. along the way. Was 10 months in the middle of a pandemic enough to kill it permanently after nothing else had? Maybe. But if it were an approved project with government support on both sides, I don't see a reality where it didn't start back up. If there's money to be made, there's money to be made.
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Old 01-21-2021, 03:24 PM   #4537
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It ended up being a pipeline to nowhere but that wasn't the case at the time. It's better than CERB because it actually had the potential to give us some real gains, compared to CERB which was a handout to not even build anything at all.

Basically, my position is that the 1.5B in the best case was a huge gain for the Albertan economy. In the worst case, it's CERB for a number of people.
So just to confirm, you're saying it was a good use of $1.5 billion to create a public welfare program with a private middleman for 2000-3000 workers - in a province of 4.5 million people - when an existing public welfare program was available, all to half build the equivalent of a car that has no tires?

Is this really the position you want to take?
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Old 01-21-2021, 03:26 PM   #4538
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So just to confirm, you're saying it was a good use of $1.5 billion to create a public welfare program with a private middleman for 2000-3000 workers - in a province of 4.5 million people - when an existing public welfare program was available, all to half build the equivalent of a car that has no tires?

Is this really the position you want to take?
Hey man, that car could have taken us back to the promise land.
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Old 01-21-2021, 03:31 PM   #4539
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As long as the car runs on oil, amirite?

Just back of napkin, I think we probably would have been better off to give 3,000 workers $250,000 in cash a piece (to counter the point about supporting workers with salaries-lol) and then used the other $750,000,000 to build infrastructure in the province that has no chance of being blocked. Maybe build a new hospital with the $750,000,000.

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Old 01-21-2021, 03:34 PM   #4540
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So just to confirm, you're saying it was a good use of $1.5 billion to create a public welfare program with a private middleman for 2000-3000 workers - in a province of 4.5 million people - when an existing public welfare program was available, all to half build the equivalent of a car that has no tires?

Is this really the position you want to take?
If you are not able to understand the potential payoff to the Albertan economy for what was a 50/50 shot at worst at the time (considering Biden was supposed to be a centrist), then I don't think you understand the issue at all.

Also I'll note that I have no source on the actual number of workers, but I think your estimate is low when you consider the effects of construction in areas where there is literally zero economic activity due to the coronavirus. Also the vast majority of money was spent in materials and equipment, which is a large number of workers that aren't actually pipeline workers out on the right-of-way.

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