Al­berta’s about face

The Gulf News (Port aux Basques) - - Editorial -

Per­spec­tive truly is ev­ery­thing. Let’s be clear at the out­set: the Al­berta gov­ern­ment is right to in­ter­vene in the oil in­dus­try at a per­ilous time for both the prov­ince and its most im­por­tant in­dus­try.

The irony is that it’s Al­berta, and that sup­port for the prov­ince’s planned intervention is sup­ported across much of the pro­vin­cial po­lit­i­cal spec­trum.

Here’s what’s hap­pen­ing: faced with a clearly de­pressed oil price, grow­ing in­ven­to­ries and oil that’s priced low par­tic­u­larly be­cause of ship­ping bot­tle­necks, the Al­berta gov­ern­ment is in­ter­ven­ing in both the oil busi­ness and the rail­way in­dus­try. The gov­ern­ment in­tends to buy enough rail­way en­gines and tanker cars to start ship­ping an ad­di­tional 120,000 bar­rels a day by rail, and is man­dat­ing an 8.5 per cent cut in oil pro­duc­tion to re­duce the pro­vin­cial oil stock­pile and drive oil prices up.

As Al­berta Pre­mier Rachel Not­ley said in a prov­ince-wide speech, “In Al­berta we be­lieve that mar­kets are the best way to set prices, but when mar­kets aren’t work­ing, when com­pa­nies are forced to sell our re­sources for pen­nies on the dol­lar, then we have a re­spon­si­bil­ity to act.” Gov­ern­ment, she said, has “a re­spon­si­bil­ity to de­fend our prov­ince and to de­fend our re­sources.”

The move is sup­posed to re­cover $80 mil­lion a day in lost pro­vin­cial gov­ern­ment rev­enues.

The re­sponse has been gen­er­ally pos­i­tive, though some oil com­pa­nies com­plain they had suc­cess­fully planned for the cur­rent prob­lems and are be­ing pe­nal­ized for mak­ing the right busi­ness de­ci­sions.

But cast your mind back to Pierre Trudeau’s Na­tional En­ergy Pro­gram, and Al­berta’s com­plaint that the fed­eral gov­ern­ment had no busi­ness in­ter­ven­ing in the oil in­dus­try. The NEP was also a re­ac­tion to a bro­ken mar­ket, im­pos­ing a Cana­dian oil price when world mar­kets were shoot­ing up­wards and Al­berta was mak­ing wind­fall oil rev­enues.

Back then, in­ter­ven­ing in the mar­ket to share the Al­berta wealth and to lessen the dam­age done by high oil prices on other Cana­di­ans was deemed by Al­ber­tans as a heavy-handed abuse of fed­eral power. The tone then was vir­u­lent enough that some Al­ber­tans had bumper stick­ers say­ing, “Let the East­ern bas­tards freeze in the dark.”

Now, Al­berta’s gov­ern­ment did have to act, if for no other rea­son than to pre­vent a non­re­new­able re­source from es­sen­tially go­ing to waste.

But, to re­cap: in­sti­tut­ing gov­ern­ment mar­ket con­trols to mod­ify the oil price, mak­ing the fed­eral gov­ern­ment more money and low­er­ing the cost of oil for other Cana­di­ans is a very, very bad thing and an abuse of gov­ern­ment pow­ers.

But in­sti­tut­ing gov­ern­ment mar­ket con­trols to mod­ify the oil price to pro­tect Al­berta rev­enues and in­crease the price of oil for Al­berta oil op­er­a­tions is a very, very good thing and ab­so­lutely a proper use of gov­ern­ment pow­ers.

Got it. Beauty is in the eye of the be­holder.

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