Danielle Smith is still dreaming when it comes to oil’s future

Alberta’s UCP government may like to pretend it sees the world differently than Saudi Arabia but when it comes to their biggest industry, they speak the same language. Both have said the International Energy Agency’s predictions about the imminent arrival of peak oil demand are massively overblown and that consumption will remain strong for decades to come. That’s why the kingdom’s recent announcement to abandon plans to increase its maximum sustained production capacity should have gotten Danielle Smith’s attention. The explanation that Energy Minister Prince Abdulaziz bin Salman offered at a recent industry conference, meanwhile, should have stopped her cold.

“I think we postponed the investment simply because … we’re transitioning,” bin Salman said. “And transitioning means that even our oil company, which used to be an oil company, became a hydrocarbon company. Now it’s becoming an energy company.” They might not ring a bell at the top of a market, as the saying goes, but his statement is about as close as it’s going to get for fossil fuels.

So far, Smith has refused to reckon with this reality. In a world where global demand for oil is in the process of starting to roll over, she actually seems to think Alberta can double its production by 2050. As she told Tucker Carlson (during his brief stopover in Alberta en route to his date with Vladimir Putin in Moscow), “I think we should just double down and decide we’re going to double our oil and gas production because truly, where else does America want to get its oil from?”

She tried to play this card again during her recent visit to the United States, where she met with some of the most notoriously retrograde Republican senators in an apparent attempt to drum up business for Alberta. “Serious question for America,” she posed on Twitter. “Would you rather get your energy from Iran and Venezuela or your friends in Canada?” Here’s one serious answer: America currently imports almost no oil from Venezuela and has only registered imports from Iran in six months over the last 32 years. There is, in other words, almost nothing for Canada to replace here.

This wasn’t the only aspect of America’s energy system she doesn’t seem to understand. In a video posted to social media, Smith suggests the United States is actually behind Canada when it comes to climate policy, and we should avoid getting too far ahead. “I know that there are often proposals for what decarbonizing might look like on a number of fronts,” she said, “but I’m not seeing that America is moving as quick as Canada. That’s one thing I’m hoping we can bring in sync.”

That might have been true back in 2020 or so, but in the years since Donald Trump begrudgingly left office, the Americans have surged past Canada and most of the rest of the world. In 2021, the Biden administration announced a net-zero electricity target by 2035, the same one that Smith has said time and time again is simply impossible for her province to reach. And while Canada has committed to a 40 per cent reduction from 2005 levels in greenhouse gas emissions by 2030, the United States is aiming for 50 to 52 per cent.

The Inflation Reduction Act (IRA), which was passed in 2022, is already doing the heavy lifting there. In a recent report, Macquarie Investments described the IRA as the “most ambitious piece of climate legislation in the history of the United States” and noted that it has already fundamentally rewritten the economics of renewable energy and triggered a massive surge of new investment in it. “In the 12 months after the IRA was passed, its provisions — including investment and production tax credits — resulted in more than $US110 billion in new investment in clean technology manufacturing alone,” it noted.

Maybe Smith’s biggest misunderstanding of all is her continued belief that net-zero targets are somehow compatible with growing Alberta’s oil production and exports. If the United States was to reach its net-zero climate targets by 2050, that would eliminate upwards of 10 million barrels per day of oil demand and require far, far fewer barrels of Canadian supply. Even under global energy analyst Wood Mackenzie’s less ambitious “base case,” U.S. demand will still drop by seven million barrels per day by 2050.

All of this isn’t just writing on the wall. It’s a message painted in bright red graffiti that says the world is going in a different direction. After all, if Saudi Arabia — a petro-dictatorship with immediate access to tidewater and some of the cheapest and most easily accessible oil on Earth — isn’t trying to grow its production, what makes Smith think Alberta has any business trying?

Then again, this is the same person who claims hydrogen is going to be the passenger vehicle fuel of the future right as Shell is closing all its pumping stations in California. When it comes to climate and energy, she seems determined to serve as a reverse bellwether, pointing her province away from where things are actually headed. In time, that will be obvious to all but the most blinkered partisans. By then, though, the race to reach net zero will be lost. Maybe that’s been her goal all along.