Al­berta’s oil woes are Canada’s prob­lem, too

Sentinel-Review (Woodstock) - - OPINION -

With a som­bre speech that sounded more like wartime ad­dress than pol­icy an­nounce­ment, Al­berta Premier Rachel Not­ley an­nounced Sun­day the province is ordering the oil sec­tor to cut pro­duc­tion.

For a province that prides it­self on its ad­her­ence to free en­ter­prise — even with the NDP in power — it’s an as­ton­ish­ing turn of events.

Per­haps no less re­mark­able is the move was pre­ceded by a plea for such in­ter­ven­tion by some ma­jor play­ers in an oil in­dus­try known for its dis­taste for past po­lit­i­cal in­ter­fer­ence. In­deed, other en­ergy firms re­main at odds with the in­tru­sion and be­lieve the mar­ket should deal with the Al­berta oil glut.

Prob­a­bly most ex­tra­or­di­nary is that, aside from quib­bles about tim­ing and scope, Not­ley has the sup­port of United Con­ser­va­tive Party Leader Ja­son Ken­ney, a fierce po­lit­i­cal foe, and Al­berta Party Leader Stephen Man­del.

Let’s not for­get this man­dated, year-long 8.7 per cent pro­duc­tion cut, which starts in Jan­uary, fol­lows another un­usual Al­berta gov­ern­ment plan: to buy as many as 80 lo­co­mo­tives and 7,000 rail cars to move oil. The phrase, a nec­es­sary evil, or even, des­per­ate times call for des­per­ate mea­sures, ap­pear to have been coined for sit­u­a­tions just like this.

By adding rail ca­pac­ity and slow­ing pro­duc­tion, Al­berta is do­ing what it must to clear the sup­ply glut, and close the yawn­ing price dif­fer­en­tial of about US$40 be­tween its crude and U.S. bench­marks that threat­ens Al­berta’s eco­nomic well-be­ing and costs Canada an es­ti­mated $80 mil­lion a day.

Even this last-ditch in­ter­ven­tion is ex­pected to have lim­ited ef­fect, re­duc­ing the dif­fer­en­tial by only about US$4 rel­a­tive to where it would have been oth­er­wise.

The real so­lu­tion to the cri­sis re­mains in the hands of the fed­eral gov­ern­ment, which through ei­ther in­com­pe­tence or a de­lib­er­ate plan to sup­press the oil in­dus­try, helped cause the cri­sis in the first place by mis­han­dling three pipe­lines to tide­wa­ter.

The Lib­er­als can­celled North­ern Gate­way, af­ter it had been fum­bled first by the Harper gov­ern­ment. The En­ergy East project was can­celled af­ter the reg­u­la­tory goal­posts were sud­denly moved and a fed­eral court halted the Trans Moun­tain ex­pan­sion in Au­gust, blam­ing botched fed­eral con­sul­ta­tion with First Na­tions.

Ot­tawa did buy the Trans Moun­tain pipe­line, but that pro­vides no short-term fix. Al­berta has done all it can on its own. When will Ot­tawa, and the rest of Canada, re­al­ize our eco­nomic cri­sis is also theirs.

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