This week, the “Alberta advantage” didn’t just crash and burn, it augured into the ground.
Just a few months ago, a fraction of Albertans were trying to gin up a movement to secede from the cold, bureaucratic clutches of Canada’s federal government.
Premier Jason Kenney has spent the last several months serving as Canada’s unofficial leader of the opposition, a powerful foil to Justin Trudeau and his weakened Liberal minority government in Ottawa.
Of course, back in January, the price of oil had ventured above $60 a barrel. An Alberta budget based on $58-a-barrel oil was looking reasonable.
As I write this, oil is trading around $33 a barrel, hammered by both a drop in demand due to the COVID-19 pandemic and given the coup de grace by a Saudi-Russian price war.
Alberta has played an outsized part in Canadian politics for decades now, thanks to its wealth and its often-angry insistence on getting a seat at the table, pushing aside the so-called Laurentian elites of Toronto, Ottawa, and Montreal.
It’s hard to see how much leverage Kenney will have on the national scene now.
If things don’t improve soon for the price of oil – and it’s hard to see an immediate recovery – Kenney will be forced to go cap in hand to Ottawa, to the prime minister and federal government he’s spent the last several years viciously criticizing.
There will be a tendency, both among Kenney’s political opponents and among environmentalists who have fought oil and gas for years, to say “I told you so” and leave Alberta to reap the whirlwind.
We should not do this.
Alberta is going to need a rescue plan, one that is not based on yet another oil boom.
There may yet be more boom years in the next decade, maybe even into the 2030s.
But most estimates say that worldwide demand for petroleum will peak sometime around the end of this decade, by 2040 at the latest. Some forecasts say oil demand will plateau as early as 2022.
The argument that Alberta – and Canada – need to wean themselves off oil for environmental reasons has always been sound. It’s non-renewable, its extraction is often destructive to natural habitat, and, oh yeah, CO2 emissions are slowly killing the planet.
The coronavirus/price war one-two punch has driven home the truth that oil is also a house of cards economically. Busts follow booms. When it comes to not building more pipelines, you can blame Trudeau, you can blame Indigenous activists, you can blame greens, but you can’t blame any of them for what happened this week.
Canada is going to have to spend some serious money and time to help Alberta begin building an economy that is properly diversified. That means both short term, to get through this crisis, and long term, to find out what Alberta’s future is after oil.