Al­berta’s oil price al­liance a rare mo­ment of po­lit­i­cal har­mony

Fort McMurray Today - - COMMENT - KEITH GEREIN [email protected]­

Christ­mas lights have been threaded through the trees around the leg­is­la­ture, ready to be turned on Tues­day even­ing.

Hanukkah fes­tiv­i­ties have al­ready be­gun, kick-started with a cel­e­bra­tion Sun­day that had the grounds filled with He­brew mu­sic.

And snow has fi­nally ar­rived in abun­dance, giv­ing ev­ery­thing a post­card per­fect ap­pear­ance.

Per­haps it was th­ese fa­mil­iar sights and sounds of the hol­i­day sea­son that helped provin­cial politi­cians, for one brief mo­ment, come to­gether in co-op­er­a­tion to res­cue the Al­berta econ­omy.

The col­lab­o­ra­tion of which I write is the provin­cial govern­ment’s de­ci­sion Sun­day to pro­ceed with manda­tory oil pro­duc­tion cuts.

To call the move ex­traor­di­nary is an un­der­state­ment, con­sid­er­ing it is Al­berta’s first leg­is­lated cur­tail­ment in four decades.

The last time the strat­egy was em­ployed was the fall of 1980, when Pe­ter Lougheed used it dur­ing the frac­tious days of the Na­tional En­ergy Pro­gram.

At al­most any point since, it would have been anath­ema for any politi­cian to or­der cuts to the com­mod­ity on which Al­berta’s pros­per­ity de­pends.

Clearly, we are liv­ing in un­usual times when al­most all provin­cial lead­ers now say Al­berta has lit­tle choice but to do ex­actly that.

The con­sen­sus emerged be­cause of a per­fect storm that has Al­berta oil sell­ing at an enor­mous dis­count to bench­mark U.S. prices.

In sim­pli­fied terms, oil pro­duced in Al­berta can’t be moved out fast enough due to a lack of pipe­line space.

Rail and truck are be­ing used to ship some crude but th­ese are ex­pen­sive op­tions which de­press prices. At the same time, stor­age fa­cil­i­ties have been fill­ing up to the point that space has nearly run out.

Some­thing had to give. From a po­lit­i­cal stand­point, Pre­mier Rachel Not­ley couldn’t fea­si­bly sit back and let the mar­ket sort it­self out, not with jobs on the line and the provin­cial trea­sury fac­ing a dearth of rev­enue.

So the pre­mier took the only ac­tion re­ally avail­able.

Still, for a leftist govern­ment to di­rectly in­ter­vene to in­flu­ence prices took courage, es­pe­cially since that govern­ment’s op­po­nents are more con­ser­va­tive par­ties that gen­er­ally op­pose re­straints on busi­ness.

That’s why it was grat­i­fy­ing to see the Al­berta Party and United Con­ser­va­tive Party pro­vide Not­ley a Christ­mas present by call­ing for cur­tail­ment ahead of the govern­ment’s de­ci­sion. That gave Not­ley the gift of po­lit­i­cal cover for a move that would have oth­er­wise seemed highly con­tro­ver­sial.

And Not­ley gave a gift right back, of­fer­ing what came across as gen­uine grat­i­tude for the con­tri­bu­tions by the two par­ties.

It was a rare com­ing to­gether typ­i­cally seen only dur­ing nat­u­ral dis­as­ters, such as south­ern Al­berta floods in 2013 and the Fort Mc­mur­ray wild­fire in 2016.

The price crash isn’t the same life-threat­en­ing catas­tro­phe as those past calami­ties, yet the eco­nomic ef­fects are more wide­spread. Though Cal­gary and Fort Mc­mur­ray are again among the big­gest vic­tims, there’s hardly a com­mu­nity un­scathed.

The po­lit­i­cal co-op­er­a­tion to fix the sit­u­a­tion is a hol­i­day story you’d hope could last awhile.

But the re­al­ity is that with an elec­tion months away, the har­mony will last only as long as it serves the par­ties’ in­ter­ests. At the first sign the plan isn’t work­ing, that it isn’t re­duc­ing the price dif­fer­en­tial enough or stem­ming job losses, this is an al­liance that will prove as brit­tle as a box of ex­pired candy canes.

Al­ready there are signs of frac­ture.

Min­utes af­ter Not­ley’s an­nounce­ment Sun­day, Al­berta Party Leader Stephen Man­del charged that the govern­ment knew back in the spring that an oil price col­lapse lay on the hori­zon and didn’t pre­pare a cur­tail­ment pro­gram that could have been rolled out im­me­di­ately.

(The govern­ment says it didn’t ex­pect the slump would get this bad, and that com­pa­nies weren’t ask­ing for in­ter­ven­tion un­til re­cently).

Post-an­nounce­ment com­ments from UCP Leader Ja­son Ken­ney os­cil­lated be­tween com­mend­ing the NDP and crit­i­ciz­ing them for past op­po­si­tion to spe­cific pipe­lines.

That pat­tern con­tin­ued into Mon­day’s ques­tion pe­riod when the first set of ex­changes be­tween Ken­ney and Not­ley on the cur­tail­ment pro­gram were pos­i­tively cor­dial.

That is, un­til Ken­ney tried to get Not­ley to ad­mit she and her party made a mis­take by pre­vi­ously op­pos­ing the North­ern Gate­way and Key­stone XL pipe­line pro­pos­als.

Not­ley replied that some of the most egre­gious pipe­line mis­takes were made by the for­mer Harper govern­ment in which Ken­ney was a cabi­net min­is­ter.

Although the two lead­ers agree on the need for cur­tail­ment, it seems naive to ex­pect they will stop blam­ing each other for cre­at­ing that need in the first place.

Where events take us from here is any­one’s guess, but al­ready on Mon­day there were pos­i­tive de­vel­op­ments. West­ern Cana­dian Select prices rose to a much health­ier point, shrink­ing the dif­fer­en­tial to around US$23 a bar­rel.

We can only hope the progress holds, and that this rare mo­ment of po­lit­i­cal co­op­er­a­tion — how­ever brief and break­able it turns out to be — will pro­pel Al­berta’s econ­omy to a hap­pier new year.


The Al­berta Leg­is­la­ture, in Ed­mon­ton Thurs­day July 19, 2018.

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