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Elections are no time to discuss serious issues, as Kim Campbell once said, and the most recent Alberta one was no different. At a time when the ever-accelerating energy transition demanded a serious conversation about the province’s future, we instead got a personality-driven campaign that focused far more on past missteps than any plans the two sides had for the future.
That future is coming more quickly than most people in Alberta would like to admit. The $3 drop in the price of oil the day after the election should have sobered up some of the UCP’s brain trust, who are now staring at a potential budget deficit rather than a surplus if the current price holds.
The price of oil could easily rally over the summer, given the recent behaviour of the OPEC cartel and the ongoing impact of Russia’s invasion of Ukraine. But there are two other recent data points that speak even more strongly to what lies ahead for Alberta and its largest industry.
First, there’s the report from the International Energy Agency showing investment in solar power overtaking the money spent worldwide on oil production for the first time ever in 2023, a development that will only extend the lead that clean energy is building over fossil fuels. "Clean energy is moving fast — faster than many people realize," said IEA executive director Fatih Birol. "For every dollar invested in fossil fuels, about 1.7 dollars are now going into clean energy. Five years ago, this ratio was one-to-one."
The other data point comes from auto industry analyst JATO Dynamics, whose stats for the first three months of 2023 showed the Tesla Model Y was the top-selling vehicle on the planet. That’s the first time an electric vehicle has topped that list, and you can be sure it will be joined there soon by the ever-widening array of makes and models hitting the market. China, the world’s largest automobile market, has already surpassed the 25 per cent threshold for electric vehicles, and some analysts think it’s well on its way to 80 per cent of all new cars sold by 2025.
What sort of impact will this have on global demand for oil and gas and, by extension, on Alberta? And what, if anything, can the province do to prepare for the tsunami of change that’s headed its way? Those are the questions our political and thought leaders should be asking. Instead, they seem more focused on pretending that tsunami doesn’t even exist or finding a way to blame the federal government for its impacts.
Take Licia Corbella, a former Calgary Herald columnist (and UCP member who wrote plenty of pieces puffing up the party), who described the Alberta NDP as “the enemies of Alberta’s oilpatch.” As proof, she offered up anti-pipeline statements made by various NDP members in the near and distant past (some from more than a decade ago), along with an unsubstantiated assertion that the party’s proposed corporate tax increase was really about stifling the expansion of the oil industry (even though, as University of Alberta economist Andrew Leach noted on Twitter, it would have added a grand total of 36 cents in extra costs to new oil projects in the province).
What’s actually “stifling” the oil industry is reality, though, and its biggest enemies are people like Corbella and the politicians who pretend the energy transition can be ignored without consequence. The decision by Equinor on Wednesday to postpone its Bay du Nord project for three years is a good reminder of the rapidly changing landscape, not to mention the impact it will have on the economies of oil-producing regions like Newfoundland and Alberta. An election would have been a good time to talk about that changing landscape before the changes really hit home. Alas.
Instead, Danielle Smith’s government will double down on the province’s increasingly precarious position. Bill 1, which will require it and any future government to put tax increases to a referendum, only binds the province more tightly to its wildly fluctuating oil and gas revenues right as global demand for fossil fuels is about to roll over. After all, a referendum on raising taxes in Alberta would be only slightly more palatable than one on renaming the province “Trudeauland”.
The inevitable downturn in oil prices, when it comes, will be written off by this government and its proxies as the result of federal policy or woke environmentalists rather than a rapidly changing world they can’t — or won’t — understand. It will continue to fight rearguard battles over non-existent pipelines and long-since mothballed LNG projects, consuming time and treasure that could be spent far more productively. For all their talk of protecting future generations from deficits and debt, it will be tomorrow's Albertans who will pay the highest price for today’s choices.
Ironically, the federal government might have to save Alberta from itself. After all, if global demand for oil eventually declines as aggressively as the IEA’s forecasts predict, prices will almost surely follow. That could leave Alberta’s oil companies unable to pay off hundreds of billions of dollars in environmental liabilities they’ve accumulated over the years, and it would put the province’s finances in a hole so deep, it might not ever dig itself out. All of a sudden, that federal equalization program that’s been the bane of Alberta’s existence might start to look like a lifeline.
It doesn’t have to come to this. Even now, it’s not too late to reverse course and start taking this future more seriously. If only Richard Nixon could go to China, maybe only Danielle Smith can truly level with Albertans about the fact the oil and gas industry is about to get thrown into reverse. But given her track record on climate change, and her own work lobbying for a plan to pay companies billions of taxpayer dollars to clean up their own messes, it’s hard to imagine Alberta having the come-to-Jesus conversation it needs right now. And so, all that’s left is the familiar prayer for another boom — one that Smith is probably more than happy to lead.
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For those not believing how fast this change presently in progress, is happening, check out podcast called ENERGI TALKS with host Markum Hislop. An eye opener.
Yesterday, May 31/23 a Greek Solar Energy Company announced the largest solar energy project in Canada in Eastern Southern Alberta, 1.2 GW
Nice!
Danielle Smith and the UCP will eventually drive Alberta into a hole and then the misinformed Albertans that were beaten with the Trudeau land nonsense, will of course blame the Federal government for not supporting a dying industry. These dinosaurs will get a rude wakeup call that the world was moving forward, while the UCP with blinders on was moving backwards. In the end, Albertans will be left with a mess created by the oil and gas industry to clean up, with no money to do so.
How the province has managed the entire oil sands mess is a disgrace, especially not holding the oil and gas companies accountable to clean up the mess and their abandoned oil well.
I'm just glad I don't live in the narrow-minded minds of the UCP.
well put Albertans might wake up when they wake up to the mess the oil and gas industry is leaving behind while making lots of money. They may also appreciate Canada- MAYBE- when we have to bail the Province out of its financial and environmental mess.
After reading Kevin Taft's "Oil's Deep State" (2015) I became convinced that the oil industry and the Alberta government became one and the same after Peter Lougheed left public office.
Now there's a new player vying for control over the government: Conspiracy theory theocracy.
WTF?
Great article. Please everyone share it wide and far. The most recent Alberta sleepwalk unfortunately is a foreshadowing of what Canada will be in for if the mainstream media doesn't sober up right away, and begin explaining to Canadians the danger of a CPC government under Pierre Poilievre. Said opposition leader of course is a Danielle Smith supporter and fellow fossil fuel advocate - climate policy, Canadian unity and reality be damned.
Agreed. The mainstream media won't do that though; they've been giving themselves away lately by starting this tempest in a teacup, vying with the cons for the role of underminers in chief; it's been the Globe and Mail headline every day.
Watching question period for as long as I could stand to the last few days, the only voice worth listening to is Jagmeet's because only HE intends to GET the security clearance and read the relevant information so reasonably offered. Blanchet is actually spluttering a bit as he aligns with Boilievre in being nastily, and irrationally obstructionist for the sake of it, which Trudeau ends every rebuttal by pointing out, along with the repeated and generous (one might even say, LIBERAL) offer to inform/educate themselves.
"that federal equalization program that’s been the bane of Alberta’s existence"
That phrase should be in quotation marks, because it's political fiction. Equalization is not the bane of Alberta’s existence.
In 2019-20, Alberta taxpayers contributed 14% of federal revenues = 14% of funds for equaliza-tion. 14 cents on every tax dollar collected and spent. 14 cents on every equalization dollar. (2019)
The bulk of federal revenues — 86 cents on the dollar — is generated outside Alberta — mostly by wealthy Canadians and profitable companies residing elsewhere.
The top 10% of Canadian income tax return filers pay just over half of total personal taxes. The tax contributions of the top 10% of Canadian income tax return filers dwarf the total tax contributions of all Alberta taxpayers (a larger group). Most wealthy taxpayers and profitable companies who contribute the lion's share of federal revenues do not reside in Alberta.
Also, the Alberta narrative that the province has "never received more than it contributed to Equalization" hit a brick wall in 2020 when it in fact did receive ~$10B more than it contributed (source: U of Calgary Economics Dept.). This was attributed to the sudden impact of the pandemic that followded several years of low world oil prices and less revenue flowing into government coffers.
Just another example of ignoring the facts like how Alberta got more federal money during the pandemic than any other province. Of course the way to address that is to deny that the pandemic was even a pandemic, so threaten Theresa Tam!
That level of denial is on a par with the mental disorder of pathological lying and with the widespread cognitive dissonance that causes in the rest of us, the deep divisions that have developed were inevitable. And have been part of a deliberate strategy.
That was just mentioned on Power and Politics where they actually linked it with the Republican Party playbook, and although everyone knows that's also what the conservatives here do, AND after spending several minutes berating Pierre Poilievre for going way too far in "question period" in the House of Commons and creating a race to the bottom, the upshot of the discussion was still that what's needed is a new, positive "leader" who will NOT be baited, who will rise above CONSTANT personal attacks, as if Trudeau hasn't done that for 8 bloody years.
The panel's reaction was that same odd, blanket aversion that I see people display when faced with open conflict; it's like many parents do when faced with their kids fighting; they're dismayed so send both or all kids to their room, despite there probably being an instigator, for the sake of "fairness" and because they don't know for sure what went on in the heat of the moment.
But we bloody well DO KNOW WHO STARTED this crap; some of us remember the shock of the first American style attack ad under Harper where Chretien's facial tic was mocked! And we can all see the boyish smirk that never leaves Poilievre's face (sort of a resting brat face), so just because Trudeau as a human being reacts by losing his temper occasionally, somewhat, certainly does NOT MEAN that HE is somehow ALSO the problem here, far from it.
So what I keep saying is that hatred of Trudeau that has become obsessive at this point actually seems to be like subliminal advertising or something, because I keep seeing and reading a "falling in line" view of knee-jerk bothsidesism where people can only talk about "politicians" generically instead of singling out the conservatives, period. Also, weirdly, they seem to do this without even realizing it. Watch the panel on "Power and Politics" today and you'll see what I mean.
Clearly our sense of fairness as Canadians and progressives is officially overdeveloped at this point, and has become our own version of "a problem with the truth."
Rachel Notley's NDP has shown itself just as incapable of having an adult conversation with Albertans. Notley will not publicly admit the dawning reality of the energy shift as the sun sets on Alberta's fossil fuel industry.
The federal Liberals likewise have chosen to double down on fossil fuels as the basis of their "climate" plan. Owners and sponsors of the Trans Mtn expansion project supported by Max Fawcett.
"Conservative" deni-osaurs and petro-progressives are both in denial.
I think that difference between the "wont's" and the "can'ts" may well describe the ongoing rift in the UCP, the latter being the "socons" and the former being the guys making use of them to get power.
Max's article provides much-needed hope which we all really need right now (it's why I read Bloomberg Green) but the image of Albertan conservatives becoming "have-nots?" Ahhhhhh, yes, it's truly sustaining to look forward to the time in the not too distant future when the hordes of millstone people "myth-ing" the point get kicked back onto the sidelines and under the rocks from whence the latest batch came....
Fawcett hits the nail on the head in this piece.
"...there’s the report from the International Energy Agency showing investment in solar power overtaking the money spent worldwide on oil production for the first time ever in 2023, a development that will only extend the lead that clean energy is building over fossil fuels."
Solar power is now the cheapest form of energy ever invented by civilization on a world scale. Wind is achieving prices that outcompete coal and gas in electricity production in unsubsidized market auctions in Alberta own southern backyard. These facts have multiple sources to check, not the least the IEA and electricity auction records. If you want to make a real difference but don't want to put on a show of protest or take fighting stances in social and mainstream media, then quietly invest in Alberta renewables.
"China, the world’s largest automobile market, has already surpassed the 25 per cent threshold for electric vehicles, and some analysts think it’s well on its way to 80 per cent of all new cars sold by 2025."
This is true, and Fawcett has quite a few independent sources he can check. It's also true that the intense affordability and efficient principles inherent in human scaled urbanism are an ideal example of transition in the 21st Century (walkable communities, transit-oriented development, multiple zoning to create continuous sidewalk retail, offices, institutions and residential uses in neighbourhoods, etc.), but that won't lead to the conversion of sprawling suburbs and exurbs into thriving self-sufficient towns in less than two generations.
In the meantime, EVs have a role to play in killing off the internal combustion engine once and for all, in significantly lowering overall emissions (accounting for embedded CO2 in the manufacturing and shipping process), in dramatically decreasing oil dependency and demand, and in R&D into battery technology which has already seen huge advances in safer chemistry away from cobalt and nickel, the use of more common materials like iron, phosphates and salt, and in deep recycling. Recycling alone can keep the expansion of metal mines under a damper.
China invited all the legacy carmakers to have access to their enormous market, and the vast majority complied with the conditions China imposed, namely 50% partnerships with Chinese companies and sharing of engineering and technological know-how. One generation later, China is imposing strict emissions standards on all cars in their market, but consumers were already ahead of them with their demand for Chinese EVs. The legacy carmakers who stuck with majority gasoline burning models (including hybrids) are now in big, big trouble. The venerable Toyota (and all Japanese companies) is top of the list for potential bankruptcy, weakened in advance for being one of the most indebted corporations in the world. Go EV or go under, seems to be the latest meme, and that will be tested greatly when China floods the west with its EVs. Models by BYD are already favoured by European cab drivers as a good "million mile" vehicle that meets EU safety standards, the highest in the world. The Toyota Prius hybrid was knocked off its perch this year. BYD and other companies like SAIC (makers of the familiar MG brand -- the MG4 is a big seller in the UK) are coming to Canada this fall and throughout the next two years at competitive price points.
Reducing car dependency is necessary, but it's a slow process that requires enormous public financial investment. A wise federal government (a contraction of terms today!) would reward cities that practice meaningfully efficacious urbanism by building out urban and intercity rail and bus transit networks free and clear of majority partnerships with metropolitan and provincial funding. If a province kicks up a fuss about the feds "bypassing" provincial constitutional control over cities, then the feds can ask a simple question, This is a confederation -- do you want our money or not? while visibly preparing to move on to more accommodating jurisdictions. Meanwhile, families in ever improving and densifying suburban communities will be able to afford dropping multiple car ownership for one EV, then eventually going carless in many cases.
It would be great if it was planned that way.
It would be, and thanks for the info. Didn't know that about Toyota, our usual go-to....
The political jurisdictional stuff will probably be far more difficult than makes sense with the 7 conservative premiers, but some are more reactive than others for sure, recalcitrant enough to even eschew federal money.
Another reason to be utterly dismayed about the results of the Alberta election. Four years is a long, long time under the circumstances.
Toyota has been perhaps the most anti-EV car company in the world for some time; apparently the CEO hates the idea and has not just refused to have Toyota make any but has also politicked hard against them and in general against taking climate change seriously. I'll be fine if they get hoist by that petard.
It's a volatile market, but a long, flat "peak" of sales, slow decline at first, is more likely that a catastrophic market crash. World oil consumption is a very large thing; big boats don't make tight U-turns.
What will drop quickly - already - are jobs in new oil prospecting. Jobs will vanish in inverse ratio to how far in the future the job is looking. The last jobs will be keeping the aging, creaking extraction infrastructure running, the tar sands plants will be run-to-failure, then duct-taped and bailing-wired and run down some more. (There's good jobs in that.)
Article today about Suncor laying off staff, money is tight. Right, money is tight after a year of really high prices that are still high. The companies are looking ahead, if Smith is not.