Wexit will not solve the Alberta’s oilsands problem

Western separatism is not new. It has flared up whenever Western Canadians — particularly those in Alberta — feel hard done by.

In 1980, Pierre Trudeau’s National Energy Program spawned the Western Canada Concept, a party determined to create a new country out of Alberta, Saskatchewan, Manitoba and British Columbia.

The failure of Stockwell Day’s Canadian Alliance to win power in the 2000 federal election gave rise to the Alberta Independence Party.

Neither separatist organization caught fire. The WCC captured 12 per cent of the vote in the 1982 Alberta election but took only one seat. The Alberta Independence Party, while garnering considerable national attention, did even worse.

Along the way, organizations like the Separation Party of Alberta and the Alberta First Party, rose and fell.

In light of this history, it’s worth taking the advent of yet another Western separatist party with a grain of salt.

Still, the new Wexit Canada is causing much consternation in political circles. Ontario Premier Doug Ford says he has never seen the country so divided.

Ford and other doomsayers may want to relax. We have seen this movie before. The West has legitimate grievances, including a federal-provincial formula for equalization payments that always seems to favour Quebec. But up to now, at least, Westerners have been able to solve their political grievances within Canada.

The more difficult ones to solve are economic. Alberta is suffering not because, as Premier Jason Kenney insists, Prime Minister Justin Trudeau is plotting to shut down the oilsands.

Rather, it is suffering because the expansion of the oilsands no longer makes economic sense.

That is the significance of energy giant EnCana’s decision to move its headquarters from Alberta to the U.S.

Essentially a natural gas company since it spun off its tarsands operations in 2008, Encana has decided to get back into oil. But it figures, logically, that the best place to do this is the U.S., which has both the capital the company needs as well as ready access to cheap, fracked crude oil.

Alberta’s oilsands still produce a positive marginal return to companies that have already invested the massive amounts needed to get these projects moving. But there is little incentive to invest more.

Thanks in large part to fracking, the world is awash in oil. As a result, crude prices remain relatively low.

Nor are pipelines a panacea. New pipelines would help Alberta producers somewhat. But as the latest chapter in the Keystone saga illustrates, an unexpected leak can indefinitely shut down an entire pipeline — with devastating effects for producers.

More to the point, pipelines don’t address the fundamental downside of Alberta’s heavy oil: It is expensive to produce.

This is the real problem facing Alberta. It has tied its fate not just to oil but to a form of oil with a perilous future. The province has long been a place of boom and bust. Its economy now might be better characterized as bust and notquite-so bust.

There are ways out of this. Former premier Peter Lougheed knew the good times would come to an end one day, which is why he put aside oil revenues to create a heritage fund (a fund that later premiers would squander with abandon).

Still, it is not too late. Alberta is a sophisticated economy. Albertans are notoriously energetic. If they wish, they can wean themselves from their overarching dependence on the oilsands.

Ford wants the premiers to get together to discuss national unity. Fine and good. Fretting about national unity is a Canadian obsession. But that alone won’t help Alberta.

Even if Andrew Scheer’s Conservatives had won last month’s election, Alberta would be in a pickle. By focusing almost exclusively on the tarsands, it has tied its fortunes to a fading star.

Thomas Walkom is a Toronto-based columnist covering politics. Follow him on Twitter: @tomwalkom