Parkland Institute
Op-eds | March 05, 2012

Alberta could lead next national energy program

Parkland Institute

Many will remember the made-in-Alberta bumper sticker of the 1980s that told Canadians outside of Alberta that they could "freeze in the dark." The message caught the mood of many Albertans enraged by the National Energy Policy. In his role as premier, Ralph Klein rarely missed the opportunity to invoke memories of the NEP while telling the "feds" and his provincial counterparts in no uncertain terms to keep their paws off Alberta's resources. In those days, Alberta was content to play a limited, even isolated, role in Canada's national dialogue; a stance emulated by the Reform Party and repeated scant years ago by several prominent Albertans, including the current prime minister, who advised the provincial government to erect firewalls to protect against the barbarians at Alberta's gates.

Recently, however, Alberta's new government, under Premier Alison Redford, has turned its gaze outwards, its hands open in an apparent gesture of goodwill. Where previous Alberta governments have exhibited a false bravado, mixed with terminal paranoia, the current government exudes a refreshing confidence in wanting to re-engage with the rest of Canada.

This confidence has obvious material roots. The fact is, Alberta is a very wealthy and dynamic player in Canada. It's been that way for a while, however. So, besides the actors, what's changed?

One thing is that, as wealthy as it is, many Albertans -- politicians, businesspeople, academics, and others -- recognize that the province is not an island unto itself. The recent recession, especially the collapse of the US market, scared Alberta's political and economic elite; so much so that they have been looking for allies and other partners since.

As long as the oil flowed from American companies in Alberta to American cities, there was no problem. But Alberta is land-locked and as the Northern Gateway pipeline debate shows, in order to get its oil and gas to market, Alberta needs the help of British Columbia.

But Alberta's desire to make friends and influence people goes beyond Northern Gateway. For the first time in decades, the Alberta government is genuinely concerned about the province's political, economic, and environmental image. It needs the rest of Canada to "buy into" Alberta's success. Hence, Finance Minister Ron Liepert's recent clarion calls for other provinces to Alberta's energy expansion plans. As reminded by Liepert, Alberta's petro-industry is the source of a lot jobs in other parts of Canada, not to mention the source of remittances from workers drawn to work in Alberta's oil sands and, of course, federal income tax.

Discussions of the national role that Alberta's oil wealth plays are not limited to immediate jobs, incomes, or taxes, however. Among other "national" ideas floated by the Alberta government has been the idea but little more of a "national energy strategy."

At the very least, Alberta's awakening sense that the rest of Canada matters has resulted in renewed discussions about "exporting" Alberta oil to eastern Canada. Such a move is long overdue.

Currently, Quebec and Atlantic Canada get 80 per cent of their crude from Europe, Africa and the Middle East. Creating a national energy market would provide a reliable source of crude to that region, while also providing a reliable outlet for Alberta's production -- a win-win situation that, if imperfectly, replicates in reverse the east-west connectivity that marked Sir John A. Macdonald's old National Policy.

Alberta's notion of taking a national role does not go far enough, however. Too much of Alberta's economy is not diversified, narrowly focused on the petroleum industry. Moreover, the dominance of this single resource is creating a dangerous instability not only for Alberta's economy but also for the Canadian economy as a whole, as other industries -- especially the manufacturing sector -- are swept away.

What is to be done? Alberta could and should take a bigger role in shaping Canada's future. To this end, Alberta should do three things besides pushing for national pipelines. First, it must put a stop to exporting unprocessed bitumen. Alberta and Canada need to keep the value-added jobs at home.

Second, in order to dampen down the corrosive impact of inflation in Alberta, the Redford government should invest its royalty wealth outside of the province, in the rest of Canada. This would not only spread the wealth around, it would also protect Alberta financially and politically from the fallout of growing national inequities. Third, the Alberta government should slow down tar sands development. Alberta would lose nothing financially over time; indeed, it might even gain as the value of oil increases, while also gaining environmental benefits. But slowing tar sands development would also lower inflation for Canada as a whole, a real benefit to eastern Canada's struggling manufacturing industries whose exports would be made more affordable.

The irony of all this, of course, is that Canada might end up with something similar to the National Energy Policy -- the difference being that this time around it would be led by Alberta.

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