Elections are no time to discuss serious issues, as Kim Campbell once said, and the most recent Alberta one was no different. At a time when the ever-accelerating energy transition demanded a serious conversation about the province’s future, we instead got a personality-driven campaign that focused far more on past missteps than any plans the two sides had for the future.
That future is coming more quickly than most people in Alberta would like to admit. The $3 drop in the price of oil the day after the election should have sobered up some of the UCP’s brain trust, who are now staring at a potential budget deficit rather than a surplus if the current price holds.
The price of oil could easily rally over the summer, given the recent behaviour of the OPEC cartel and the ongoing impact of Russia’s invasion of Ukraine. But there are two other recent data points that speak even more strongly to what lies ahead for Alberta and its largest industry.
First, there’s the report from the International Energy Agency showing investment in solar power overtaking the money spent worldwide on oil production for the first time ever in 2023, a development that will only extend the lead that clean energy is building over fossil fuels. "Clean energy is moving fast — faster than many people realize," said IEA executive director Fatih Birol. "For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one."
The other data point comes from auto industry analyst JATO Dynamics, whose stats for the first three months of 2023 showed the Tesla Model Y was the top-selling vehicle on the planet. That’s the first time an electric vehicle has topped that list, and you can be sure it will be joined there soon by the ever-widening array of makes and models hitting the market. China, the world’s largest automobile market, has already surpassed the 25 per cent threshold for electric vehicles, and some analysts think it’s well on its way to 80 per cent of all new cars sold by 2025.
What sort of impact will this have on global demand for oil and gas and, by extension, on Alberta? And what, if anything, can the province do to prepare for the tsunami of change that’s headed its way? Those are the questions our political and thought leaders should be asking. Instead, they seem more focused on pretending that tsunami doesn’t even exist or finding a way to blame the federal government for its impacts.
Take Licia Corbella, a former Calgary Herald columnist (and UCP member who wrote plenty of pieces puffing up the party), who described the Alberta NDP as “the enemies of Alberta’s oilpatch.” As proof, she offered up anti-pipeline statements made by various NDP members in the near and distant past (some from more than a decade ago), along with an unsubstantiated assertion that the party’s proposed corporate tax increase was really about stifling the expansion of the oil industry (even though, as University of Alberta economist Andrew Leach noted on Twitter, it would have added a grand total of 36 cents in extra costs to new oil projects in the province).
What’s actually “stifling” the oil industry is reality, though, and its biggest enemies are people like Corbella and the politicians who pretend the energy transition can be ignored without consequence. The decision by Equinor on Wednesday to postpone its Bay du Nord project for three years is a good reminder of the rapidly changing landscape, not to mention the impact it will have on the economies of oil-producing regions like Newfoundland and Alberta. An election would have been a good time to talk about that changing landscape before the changes really hit home. Alas.
Instead, Danielle Smith’s government will double down on the province’s increasingly precarious position. Bill 1, which will require it and any future government to put tax increases to a referendum, only binds the province more tightly to its wildly fluctuating oil and gas revenues right as global demand for fossil fuels is about to roll over. After all, a referendum on raising taxes in Alberta would be only slightly more palatable than one on renaming the province “Trudeauland”.
The most important issue in Alberta's election was the one nobody touched: the energy transition and its impact on the province's future. Why Albertans will end up paying the price of that — and why Danielle Smith seems determined to raise the cost.
The inevitable downturn in oil prices, when it comes, will be written off by this government and its proxies as the result of federal policy or woke environmentalists rather than a rapidly changing world they can’t — or won’t — understand. It will continue to fight rearguard battles over non-existent pipelines and long-since mothballed LNG projects, consuming time and treasure that could be spent far more productively. For all their talk of protecting future generations from deficits and debt, it will be tomorrow's Albertans who will pay the highest price for today’s choices.
Ironically, the federal government might have to save Alberta from itself. After all, if global demand for oil eventually declines as aggressively as the IEA’s forecasts predict, prices will almost surely follow. That could leave Alberta’s oil companies unable to pay off hundreds of billions of dollars in environmental liabilities they’ve accumulated over the years, and it would put the province’s finances in a hole so deep, it might not ever dig itself out. All of a sudden, that federal equalization program that’s been the bane of Alberta’s existence might start to look like a lifeline.
It doesn’t have to come to this. Even now, it’s not too late to reverse course and start taking this future more seriously. If only Richard Nixon could go to China, maybe only Danielle Smith can truly level with Albertans about the fact the oil and gas industry is about to get thrown into reverse. But given her track record on climate change, and her own work lobbying for a plan to pay companies billions of taxpayer dollars to clean up their own messes, it’s hard to imagine Alberta having the come-to-Jesus conversation it needs right now. And so, all that’s left is the familiar prayer for another boom — one that Smith is probably more than happy to lead.
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