Western anger on the rise or is history repeating itself?

At a crowded lunch event in Calgary on Thursday, former prime minister Jean Chrétien downplayed tensions between western provinces and Ottawa. Separatist sentiments have persisted in Quebec and Western provinces for as long as anyone can remember, he shrugged. “I’ve had to live with that all my life,” Chrétien said. Former prime minister Stephen Harper, on the same stage with Chrétien, could not have been more starkly opposed. Western alienation is “on the rise for obvious reasons,” and had caught hold in numbers that are “quite shocking,” said Harper. Jesse Snyder and Stuart Thomson explain a few of the factors feeding western alienation.

AN ECONOMIC MALAISE

The Alberta oilpatch has been in disarray ever since global oil prices collapsed in the middle of 2014, pummelling corporate balance sheets and causing thousands of job losses. At the time, the price of West Texas Intermediate (WTI), a common American benchmark for crude oil, cascaded down from around US$100 per barrel to just over US$30 in six short months.

The collapse came as part of a massive boost in oil production in the preceding years that fed a substantial oversupply of the global market. Worst of all for Canadian producers, the main cause of that oversupply — the U.S. — continued to churn out more and more barrels as investors poured money into operations in Texas and New Mexico, favouring the faster investment returns they offered. Five years later, oil prices remain stuck at around half the level of early 2014.

But this only added to an even more frustrating reality: the Canadian oil industry has failed for more than 15 years to successfully build a single major pipeline, as legal and regulatory challenges caused widespread delays. Even as oilsands production continues to grow, years-long delays or cancellations of projects like Keystone XL, Northern Gateway and Trans Mountain have led to a severe shortage of pipeline capacity, forcing producers to ship hundreds of thousands of barrels every month by rail rather than pipeline — a far more costly option.

That has in turn extended Canadian companies’ long dependence on U.S. buyers, and forced them to sell their oil at a steep discount compared to competitors. With little bargaining power, Canadian firms have had to sell their barrels for as much as US$40 less than their American counterparts. And those discounts persist today: the price for Western Canadian Select (WCS), a Canadian heavy oil benchmark, was trading at US$34 per barrel on Friday compared with US$55 for American blends.

NEW LAYERS OF UNCERTAINTY

Declines in the price of oil and a decades-long shortage in pipeline capacity has brought a new focus on regulatory shortfalls that have helped snarl major infrastructure projects. A number of court decisions in recent years have delayed major oil pipelines on the premise that the Crown did not meet its “duty to consult” with First Nations impacted by the proposed developments, underscoring a hearing process that does not adequately address various social or environmental complaints.

In a bid to address this, Prime Minister Justin Trudeau introduced Bill C-69, which overhauled the review process for major projects to include considerations like whether a development would contribute to climate change or support women in local communities.

Far from reduce uncertainty, some industry groups argued it would effectively bar oil-related infrastructure from ever being built, and was deemed the “no more pipelines bill” by some opponents. Despite broad support from some other industry groups not directly tied to oil and gas, C-69 became a rallying cry in Alberta over what many saw as an explicit attempt to phase out fossil fuel companies. The bill came into force in August.

At the same time, the Liberal government also passed Bill C-48, which bars oil tankers from docking along the B.C. coast north of Vancouver, eliminating any hope of building a new pipeline in the region while the legislation exists.

ENVIRONMENTALIST SCORN

Oil producers have also faced increased pressure from perhaps a more troublesome foe: environmentalist groups seeking to outright shut down bitumen extraction. While anti-oil advocacy groups have been targeting the oilsands for some time, their message has taken a much firmer hold in recent years.

The rapid pace of environmental influence could be seen when Chrétien on Thursday referred to the oilsands as the “tar sands,” a somewhat benign definition that has nonetheless become a kind of faux pas in downtown Calgary. When Chrétien was prime minister “tar sands” was likely still a tolerable term — and was even used by the Alberta government before it made the rhetorical shift to “oilsands” in the 60s. Today, it has become an immediate proclamation of political affiliation: tar sands bad, oilsands good.

A persistent campaign against the “toxic tar sands” of northern Alberta has allowed various groups to successfully snarl large infrastructure projects like Trans Mountain, partly on the grounds that it would substantially alter the local ecology and jeopardize the traditional way of life of Indigenous people. Amid pipeline bottlenecks, meddlesome tactics from these advocacy groups has only caused existing consternation in Alberta to swell.

THE ALBERTA RESPONSE

Alberta Premier Jason Kenney has been full-throated in his response to Ottawa since winning office, even though the province appears to have few concrete options in its retaliation. Just after Trudeau won his minority government last month, Kenney penned a letter calling for the “timely completion” of the Trans Mountain expansion and a rethink of bills C-48 and C-69.

Kenney also urged the federal government to lift the cap on its fiscal stabilization program, which helps out provinces during rough economic times, and suggested tweaks to the equalization program. The program has become a symbolic punching bag for Albertans who are furious about the economic downturn and the policies of the federal government. Because it is embedded in the constitution, Kenney has argued that a provincial referendum should be enough to open it up to negotiations, similar to the referendum on Quebec’s sovereignty. The referendum threat has been Kenney’s chief cudgel against the federal government.

Kenney also launched an “energy war room” that will, the argument goes, target foreign funders of environmental activism in Canada, among other things.

At the very least, Kenney wants to drive the conversation and push Alberta’s concerns to the top of the agenda, in response to a deep-rooted feeling in the province that they are being ignored. The premier even has plans for public hearings where Albertans can air their grievances about the province’s place in the federation. In a recent news conference he summed up the mood: “People have a bloody right to be frustrated in this province.”