Tag Archives: Bitumen Bubble

Pierre Trudeau Peter Lougheed Alberta NEP

Notley searches for her Lougheed moment by demanding pipelines for Trudeau’s carbon tax

Demanding the federal government help “break the landlock” and support the construction of oil pipelines from Alberta, Premier Rachel Notley and Environment and Parks Minister Shannon Phillips drew a line for Alberta’s support of the Justin Trudeau government’s proposed national carbon pricing plan. In a statement released today, Ms. Notley stated that the Alberta government would not support the federal carbon pricing plan without federal support for increased “energy infrastructure” (a.k.a. oil pipelines).

Rachel Notley Alberta NDP leader

Rachel Notley

There is nothing more Albertan than a good old fashioned political battle between the provincial government and Ottawa over energy issues. Premier Notley may be hoping this standoff could be reminiscent of the heated political disputes that took place between the governments of Premier Peter Lougheed and Prime Minister Pierre Trudeau in the 1970s and 1980s. In the case of Mr. Lougheed, an iconic figure in Alberta politics, political fights with Ottawa can help boost a politician’s popularity at home.

When Progressive Conservative leader Jim Prentice began casting the New Democratic Party as “extremists” during the 2015 election, Ms. Notley frequently turned to quotes by Mr. Lougheed to support her party’s positions on issues like raising corporate taxes.

Ms. Notley’s NDP have been vocal supporters of the expansion of the Kinder Morgan Trans-Mountain Pipeline and the TransCanada Energy East Pipeline since she became party leader in 2014. Now, as government, the Alberta NDP’s support for oil pipeline expansion has contributed to an increasingly deep divide between the national and provincial NDP in this province. The national NDP, with strong support in anti-pipeline constituencies in British Columbia, Ontario and Quebec, has played a much less supportive role in advocating for Alberta’s oil industry.

Brad Wall

Brad Wall

The Alberta government’s criticism of the federal government puts Ms. Notley in the company of conservative Saskatchewan Premier Brad Wall, a constant critic of Ottawa. But unlike Mr. Wall’s government, which has dragged its feet on tackling climate change, Ms. Notley’s government cannot be accused of doing nothing to address climate change. Alberta’s NDP government has led the charge with its flagship ‘Climate Leadership Plan‘ which includes its own carbon tax and an aggressive phasing out of dirty coal-fired power plants.

The Alberta NDP plan enjoys the support of environmental groups and oil and gas industry heavyweights like Cenovus, Suncor, CNRL and Shell.

Meanwhile, opposition groups like the Wildrose Party are literally hoping to rehash the political battles of the 1980s. The official opposition Wildrose Party circulated a meme online today comparing the national carbon tax announcement to the unpopular National Energy Program of the 1980s. The Wildrose Party continues to be fierce critics of the federal Liberals and NDP but party leader Brian Jean has yet to offer any alternative solutions to reduce carbon emissions.

Brian Jean Wildrose

Brian Jean

Ironically, the Wildrose Party’s 2015 election platform proposes to “Ensure Alberta’s standards for CO2 emissions and pollutants are in line with national and international standards.” This statement was written during a time when Stephen Harper was Prime Minister and a national climate change plan was nowhere on the agenda. It is amazing how quickly politics can change in a short seventeen months.

Breaking the landlock,’ which I predict will become the latest political buzzword, is analogous to the “bitumen bubble” that former premier Alison Redford warned Albertans of in a televised address in 2014. Both buzzwords are part of a public campaign to build pipelines that would presumably allow for easier export of Alberta’s oil, and allow the private companies exporting the oil to sell Western Canadian Select at a lower discount rate than in previous years. This probably would not make a significant difference to Alberta until the international price of oil rebounds.

Over the past year, Ms. Notley has shown her willingness to work with Mr. Trudeau on a wide-range of issues. This may have led the Prime Minister to expect he would find an ally in Ms. Notley in his bid to implement a national carbon pricing plan. But by attaching strings to Alberta’s support for a national carbon pricing plan, Ms. Notley is playing a political game that could pay out political dividends at home. In a fight between the Alberta government and Ottawa, as Mr. Lougheed discovered, you can bet that nine times out of ten, Albertans will side with Edmonton.


Here is Prime Minister Justin Trudeau’s speech in the House of Commons today announcing the national carbon pricing plan:

Oil Pipeline still King in Notley’s Interprovincial Agenda

Three years ago this week, Conservative Premier Alison Redford took to the airwaves to warn Albertans about the ominous “bitumen bubble.” Ms. Redford warned that a pipeline bottleneck and a dramatic drop in the price of oil would rob the provincial government of up to $6 billion in natural resource revenue.

Rachel Notley Alberta NDP leader

Rachel Notley

Ms. Redford spent much of her two and a half years in office focusing on pipelines, as did her successor Jim Prentice during his short eight months in the Premier’s Office.

One of the jobs Mr. Prentice left when he decided to run for the leadership of the Progressive Conservative party in 2014 was as liaison between the (now moribundEnbridge Northern Gateway Pipeline and First Nations in northern British Columbia. Despite this experience, there was little evidence of pipeline advancement during his brief time as premier before the PCs were defeated in the May 2015 election.

Kathleen Wynne

The politics of pipelines continue to dominate Alberta’s interprovincial agenda under Premier Rachel Notley’s New Democratic Party government. Riding the success of the National Energy Strategy accepted at the Premier’s Meeting in St. John’s, Newfoundland last summer, Ms. Notley secured the tentative approval from Ontario Premier Kathleen Wynne for the TransCanada Corporation’s Energy East Pipeline.

As AlbertaPolitics.ca publisher David Climenhaga noted last week, “Premier Rachel Notley, after less than nine months in office, secured the tentative approval of the premier of Ontario and the enthusiastic endorsement of the prime minister of Canada, both members of a different political party than hers, for a pipeline to carry diluted bitumen from Alberta to New Brunswick for refining.”

Alison Redford Alberta Election 2012 Conservative leader

Alison Redford

What we are witnessing is unfamiliar: an NDP Premier advocating for this approval of a privately-owned, privately-operated pipeline that would ship oil from Alberta’s oil sands to a privately-owned and privately-operated refinery in New Brunswick. This is hardly characteristic of the radical marxist socialist extremist that Ms. Notley’s more fanatical critics claim she is.

This pipeline will not save the Alberta government from the revenue shortfall caused by the drop in the international price of oil, which is intensified due as a result of poor long-term planning during the previous 44 years of conservative governments. But it could narrow the price gap between West Texas Intermediate and Western Canadian Select and provide a new point of export for Canadian oil while also keeping refinery jobs in Canada rather than exporting jobs to refineries overseas.

Denis Coderre

Denis Coderre

The decision to approve this pipeline will be up to the federal Liberal government, which includes strong representation from Alberta Members of Parliament.

Edmonton-Centre Liberal MP Randy Boissonnault reiterated his support for TransCanada’s Energy East pipeline last week. “Our government is committed to ensuring our natural resources have access to market.  This process will include a credible environmental assessment process based on science, facts and evidence,” Mr. Boissonneault said in a statement.

Randy-Boissonnault Edmonton Centre Liberals

Randy Boissonnault

Building a national consensus around climate change and the transportation and export of Canada’s oil will be helpful for future projects. It also gives Ms. Notley an opportunity to highlight her government’s climate change plan, which includes the phasing out of dirty coal fired power plants by 2030, a move that could significantly reduce Alberta’s carbon emissions.

While Wildrose opposition leader Brian Jean squabbles with Montreal Mayor Denis Coderre over the municipal politician’s opposition to the pipeline, it would appear that Ms. Notley’s quiet diplomacy might be showing results. These type of public spats distract from the reality that Mr. Jean supports TransCanada’s Energy East pipeline but would cheer if Ms. Notley’s bid fails.

If TransCanada’s Energy East pipeline is approved before the 2019 Alberta election, Ms. Notley will be able to make the claim that an NDP Premier was able to accomplish something her conservative predecessors could not: get a new pipeline built from the oil sands to an ocean port.

Sharpen Your Pencils, Alberta. Slash-and-burn is back.

Premier Jim Prentice Alberta PC leadership race

Jim Prentice celebrates his victory in the PC Party leadership contest on September 6, 2014.

Living in the land of the lowest taxation rates in Canada allows many personal benefits but long-term government stability has not been one of them. Relying heavily on natural resource revenues, our political leaders continue to stumble from embarrassment of riches to poverty and never appear to learn from our past.

Robin Campbell Alberta Finance Yellowhead

Robin Campbell

And here we go again. Progressive Conservative Finance Minister Robin Campbell announced plans yesterday for a 9% across the board funding cut in the 2015/2016 provincial budget, which is expected to tabled near the end of March.

Two years ago, we were told that funding for colleges and universities needed to be slashed in order to survive Alison Redford‘s “Bitumen Bubble.” Twenty years ago, many Albertans accepted the deep funding cuts imposed by former Premier Ralph Klein and then watched with cynicism as the government spent the next two decades trying to repair the damage done to our public infrastructure and health and education systems.

Premier Alison Redford

Alison Redford

While claiming “all options” are on the table, the PCs have already ruled out increases to corporate taxes or resource royalties, and likely also the introduction of a provincial sales tax or a return to a progressive taxation system. Rather than looking at alternative revenue sources, Mr. Campbell and Premier Jim Prentice appear to be on an unfortunate course towards drastically cutting public service funding.

Four months ago, Mr. Prentice said he found low morale and high turnover in the public service “shocking.” But with the Finance Minister warning of deep funding cuts across the government, it is difficult to see how he plans to change this situation.

Alberta is now facing a crisis not caused by low oil prices but by decades of poor planning.

As a province with decades worth of dependence on revenues from natural resource royalties, it should not be a shock that we need to be smarter about how we plan and finance our government spending. Maybe our only problem is not our over reliance on cyclical natural resources revenues, but that the Progressive Conservatives are just bad fiscal managers.

One dull pencil

Genia Leskiw MLA Bonnyville Cold Lake

Genia Leskiw

Bonnyville-Cold Lake MLA Genia Leskiw fumbled embarrassingly this week when she tried to explain why the Standing Committee on Legislative Offices, which is controlled by PC MLAs, voted to reject a request from Child and Youth Advocate Del Graff to restore $275,000 in funding that the committee voted to cut in December 2014.

I don’t really believe they’ve sharpened their pencils as sharp as they could have,” Ms. Leskiw told CBC reporter John Archer when asked why the advocate’s request was denied. When pressed for details about why the funding was denied, Ms. Leskiw responded that she was not an accountant.

This is not the first time Ms. Leskiw has used the ‘I’m not an accountant’ defence. In 2012, she pleaded ignorance when asked about the extra money she was collecting from the infamous ‘no-meet committee,’ telling the CBC that “I don’t even look at my paycheque.

Mr. Graff asked for the funds in order to continue investigations into the deaths of children who are in the province’s care or who are supported by the province. In 2014, the PC Government faced harsh criticism when a Calgary Herald-Edmonton Journal investigation revealed the government had dramatically under-reported the number of child welfare deaths over the previous decade.

Mr. Prentice defended the funding cut and ordered the MLA committee to revoke the $500,000 in additional funding it had just granted this week to the Auditor General. The Premier’s heavy-handed move raises the question of why legislative committees exist if he can unilaterally overrule their decisions. Will any of the PC MLAs on the committee have the backbone to stand up for their decision when they meet again next Tuesday? Or will they simply bow to the whim of their party leader?

The cuts in funding for the Child and Youth Advocate and the Auditor General take place as the provincial government provides $18 million to rebuild the Kananaskis Country Golf Course, which was damaged in the 2013 floods. Public funding for the golf course has not been revoked, but plans for other critical projects, like the long promised new Cancer Centre in Calgary, have now been delayed.

Alberta is always in Tough Economic Times

“They don’t know what to do with tough economic times. It was easy enough to govern when the money was flowing in, when things were going well. They took all the credit for it at that time. It’s much harder to govern, and the mark of a good government is how they handle it, when times get difficult.” – Ray Martin, Leader of the Official Opposition (June 13, 1986)

Jim Prentice Premier Alberta

Jim Prentice

Despite Alberta’s prosperity, Premier Jim Prentice is warning we could be heading into tough economic times. The decline in the world price of oil has spooked the 43-year governing Progressive Conservative establishment and the corporate elites in downtown Calgary.

The perilous “price trough” has led Mr. Prentice to warn of a potential $7 billion revenue shortfall if oil prices remain at lower than expected levels for the entire 2015/2016 fiscal year. According to a government spokesperson, some of the missing $7 billion could come from revenue streams such as land leases, but at this point the number is largely based in speculation and politically spin.

Mr. Prentice’s prophetic $7 billion shortfall becomes more startling when learning the Alberta Government is projected to collect only $7.5 billion in crude oil and bitumen royalty revenue in the 2014/2015 budget year. This projected revenue is based on the price of Western Canada Select (WCS) oil remaining at $77.18 per barrel. Although the yearly average price is $84.02 per barrel the current price of WCS  has dropped to $48.44 per barrel.

Ray Martin NDP MLA School Trustee Edmonton Alberta

Ray Martin

If the “tough economics times” message sounds vaguely familiar, that is because it is. In oil-rich Alberta, we hear a lot from our political leaders about tough economic times, even when times are prosperous. In most cases, our politicians are managing voters’ expectations and positioning themselves to take credit as ‘prudent fiscal managers’ when the world-wide price of oil inevitably increases.

Meeting the Challenge of Tough Times” was the name of the three-year economic plan launched by Premier Ed Stelmach’s PC government in 2009.

Bitumen Bubble Alberta

Bitumen Bubble

The sharp decline of natural gas royalty revenue and that year’s world-wide recession, which felt more like a mild economic pause in Alberta, even convinced the Tories to amend the Klein-era Fiscal Responsibility Act to allow the government to pass deficit budgets.

And in January 2013, Premier Alison Redford used a televised address to warn Albertans that a $8 billion shortfall in the provincial budget was being caused by an ominous “bitumen bubble.” Ms. Redford’s bubble was then used as justification to slash funding to colleges and universities by 7% in that year’s budget.

Alberta Finance Minister Ron Liepert

Ron Liepert

But the PCs have not always predicted “tough economic times.” In 2012, then-finance minister Ron Liepert told the Calgary Chamber of Commerce to expect $16 billion in projected resource revenues by 2015. A huge jump in revenue would certainly increase the likelihood of Mr. Prentice calling a provincial election in early 2015.

Alberta’s government has heavily depended on revenue from cyclically priced resource commodities for decades. After years of unrestrained growth, no one should be surprised that Alberta’s economy could slow down.

The question is how we respond to actual tough economic times in Alberta. Was NDP Official Opposition Leader Ray Martin correct in 1986 when he said that “they don’t know what to do with tough economic times”?

While some right-wing think tanks call for a return to brutal slash and burn fiscal policies, the implementation of real long-term financial planning would probably be a more mature solution.

Alberta Norway Oil Fund Money Savings

Comparing Alberta’s Heritage Fund and Norway’s Petroleum Savings Fund.

Norway, a country with 5.1 million people, invests oil revenues into the Government Pension Fund Global and contains more than $857 billion. The fund was established in 1990 to smooth out the disruptive effects of highly fluctuating oil prices. Oil-rich jurisdictions like Norway prove that economies can be both economically prosperous and environmentally green.

Alberta Premier Peter Lougheed

Peter Lougheed

Alberta, a province of 3.6 million people, launched the Alberta Heritage Savings Trust Fund in 1976. Under the leadership of Peter Lougheed, the Heritage Fund initially received 30% of government resource revenues and was worth $12.7 billion in 1986. The Heritage Fund is now worth only $17.4 billion.

Facing tough economic times in 1987, the PC government of Don Getty halted all transfers to the Heritage Fund. Zero deposits were made between 1987 and 2004.

This week, PC MLAs passed Bill 11: Savings Management Repeal Act, which repealed the Savings Management Act, which was enthusiastically passed by the same group of PC MLAs in March 2014. The earlier bill would have diverted resource revenue to the newly created Alberta Future Fund, Social Innovation Endowment account and Agriculture and Food Innovation Endowment. The bill passed this week eliminates those new funds.

Kevin Taft Liberal Party MLA Alberta

Kevin Taft

Despite talk of revenue diversification, it is questionable whether the governing PCs would seriously consider increasing resource royalties, reinstating a progressive taxation system or introducing a provincial sales tax.

While many politicians view tax increases as politically unpalatable, a slight tax increase would not destroy the our province’s economy. “If Alberta increased its tax rates by $11 billion our province would still have the lowest tax rate in Canada,” Kevin Taft wrote in his 2012 book, Follow the Money.

Dr. Taft’s book breaks down government spending patterns over the past 30 years and details how corporate profits have skyrocketed in Alberta at the same time the PC Government has struggled with deficit budgets.

As a province with decades worth of dependence on revenues from natural resource royalties, it should not be a shock that we need to be smarter about how we plan and finance our government spending. Maybe our only problem is not our over reliance on cyclical natural resources revenues, but that the Progressive Conservatives are just bad fiscal managers.


Primetime Politics this week…
On this week’s Alberta Primetime politics panel, I joined Rob Breakenridge, Roberto Noce and host Michael Higgins to discuss the Gay-Straight Alliance debate, Moe Amery‘s texting-while-driving-demerits bill, and Bill 2: Alberta Accountability Act.