National Post (National Edition)
Trudeau plan to end oilpatch is working — a little early
There’s long been a view in Alberta that the Trudeau government is intentionally winding down Alberta’s oilsands, and ultimately the entire fossil fuel industry.
This belief has a basis in fact. Indeed, you could say it’s not a fake fact, but an honest-to-goodness fact fact.
It was Prime Minister Justin Trudeau himself who said in January 2017: “We can’t shut down the oilsands tomorrow. We need to phase them out. We need to manage the transition off of our dependence on fossil fuels.
“That is going to take time. And, in the meantime, we have to manage that transition.”
He said that to a friendly audience in Peterborough, Ont. A few days later he was in Calgary, where criticism had erupted.
Asked about his comments, he said, “um, I misspoke … I said something the way I shouldn’t have said it.”
But Trudeau didn’t say he’d been wrong. He just wished, it seemed, that he hadn’t made himself so obvious.
The key word in Trudeau’s Peterborough remarks was “manage.” As in, “we have to manage that transition.”
That’s what the Liberals have been doing since being elected in 2015.
They’re managing down Alberta’s industry by imposing new regulations, killing pipeline options, withdrawing tax incentives and passing energy-hostile bills such as C-48 and C-69.
Their goal isn’t to shutter Alberta’s main industry tomorrow. They see it as a multi-decade thing.
But managing an industry down is kind of like nudging a toboggan at the top of a steep hill.
Give it a little push and it might slide a short way. Or it might suddenly speed up, run loose and smash into a tree.
That is suddenly happening. A variety of factors encouraged by the Liberals have now run out of control, turning Alberta’s managed slide into an abrupt and uncontrolled plunge.
The Liberals may get the moribund industry they envision — about a generation early.
The crash in prices for Alberta oil and bitumen is a direct result of Liberal hostility to both the Northern Gateway and the Energy East pipelines.
Those ideologically motivated moves left just one option for offshore export.
Eventually, the Liberals had to put themselves in the strange position of buying the Trans Mountain pipeline project for $4.5 billion.
They promptly made such a mess of it that Federal Court judges overturned the National Energy Board approval.
Boxed in, increasingly reliant on overstressed rail, beset by unending hostility in B.C. and berated by U.S. competitors, the typical barrel of Alberta oil now sells for a fraction of world prices.
We’re at the stage where some producers (not refiners) are willing to shut in their own barrels in order to drive prices back up.
And that, of course, is exactly what the anti-oilsands people want; a product so valueless that it’s simply left in the ground.
Investors might see this crisis as a cyclical thing, maybe even a good moment to invest before energy starts roaring again.
But hardly anybody expects a quick relaunch.
How could they, when virtually every industry and investment expert says Bill C-69 will make construction of future pipelines virtually impossible?
How could they, when Trans Mountain is mired in the latest round of NEB hearings and will inevitably face more court challenges after construction restarts?
How could they, when Bill C-48 isn’t a North Coast tanker ban at all, but an export ban on Alberta’s refined products? (Under C-48 the world’s biggest tanker is free to land at Kitimat, B.C., as long as it doesn’t load a long list of Alberta’s primary and refined products.)
The whole plan — Liberal as well as Alberta NDP — has been to replace oil and gas with a variety of green and upgraded products.
After a leisurely generation or so, petroleum was to pass into gracious retirement.
But that assumed external economics would somehow stay neutral.
Instead, deeply negative trends are running away with Alberta’s economy and main industry.
The price gap is forecast to cost the Alberta treasury $5 billion per year.
On Tuesday, respected academic Trevor Tombe said the Alberta government’s annual deficit could be $40 billion by 2040 (equivalent, broadly speaking, to $14 billion today).
Premier Rachel Notley’s NDP is madly racing to goose upgrading with cash injections.
She strikes a panel to consult on the price gap and names as one member Brian Topp, her ex-chief of staff with a long record of hostility to oil and gas. What on Earth is she thinking?
The damage to Ottawa’s finances will be huge, but that seems slow to sink in.
Maybe that’s because for many of Trudeau’s MPS and ministers, the crisis looks like a kind of victory.
The plan for Alberta is working. Just a little early, that’s all.