Special Report: Climate Change

Alberta's Oil Tantrum Masks a Desperate Cry for Help

Alberta's entire political economy is built on resource extraction, corporate capture and rampant denial of reality.

By Ryan McGreal
Published October 24, 2019

All this post-election talk about Alberta separation certainly provides lots of grist for the mill, but I'd like to resist the urge to dig into conservative fragility and libertarian tears for a moment and reflect instead on this idea that Alberta doesn't need Canada.

Despite surface appearances, Alberta's economy is moribund, tied entirely and hopelessly to high-cost, low-value resource extraction of an inferior product with extreme global price volatility that needs to be refined considerably just to become crude oil.

Alberta oilsands (Image Credit: Environmental Defence)
Alberta oilsands (Image Credit: Environmental Defence)

The political culture is monolithic and effectively controlled by a handful of fossil fuel companies whose only goal is squeezing revenue out of the province for as long as possible, which is why Alberta has among the lowest oil industry royalty rates in the industrialized world. While Norway leverages their oil revenue into a trillion dollar sovereign wealth fund, Alberta trades its oil to avoid a provincial sales tax.

It would be bad enough if Alberta was 'merely' trapped by the Resource Curse, with a de facto one-party political system, sluggish economic growth, staggering environmental degradation and widespread public resentment and alienation.

But global warming is a real thing, it is already happening observably and measurably around the world, and it is getting worse. In fact, the rate of warming is increasing and we are hurtling toward tipping points where it becomes uncontrollable.

Yet Alberta's political culture is so dysfunctional that the first thing its governing party did, after closing the party schism that had caused it to lose the previous election and reclaiming power, was to cancel the extremely modest carbon price the previous government had implemented to facilitate a 'social licence' to keep extracting oil.

And they eliminated the price on carbon as smoke from out-of-control wildfires, made worse and more frequent by global warming, literally blew into town and canceled their celebratory presser. You couldn't write this in a TV show.

Meanwhile, Alberta has absolutely no inkling of a plan to begin to transition away from its one-trick industry of pumping steam into greasy sand, catching the bitumen that oozes out and selling it (often at a loss) to refiners. In fact, echoing a similar policy of maximum wreckage as Doug Ford in Ontario, one of Alberta Premier Jason Kenney's first acts was to kill off a renewable energy program in order to burn the bridge to a diversified future.

Alberta's entire political economy is built on resource extraction, corporate capture and rampant denial of reality, and the prevailing culture thoroughly reflects ideological demands of its industrial masters. The collective temper tantrum we're seeing is the cognitive dissonance of Alberta's deep conundrum made manifest.

This crisis is not going away, and escaping the resource curse will not be easy. We are in for troubling times and Alberta's deranged politics makes it exponentially more difficult even to name the source of the crisis, let alone address it meaningfully.

Canada needs Alberta to get with the program or we have no chance of meeting our historic obligation to decarbonize our economy. At the same time, Alberta needs Canada to support what will be an expensive, disruptive and even traumatic transition away from an unsustainable business that has seeped into the province's core identity.

But we can't build a common purpose as long as Albertans - and conservatives generally - continue to categorically deny reality.

We're going to have to have some difficult, uncomfortable conversations in the coming weeks, months and years, and we have no time to waste. We are fast approaching the point at which humans effectively lose control over the concentration of greenhouse gases in our atmosphere.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan wrote a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. His articles have also been published in The Walrus, HuffPost and Behind the Numbers. He maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.


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By jorvay (registered) | Posted October 24, 2019 at 12:01:23

I've been thinking more and more lately about the similarities between Alberta and Hamilton through its decades of dependence on steel. Steel price fluctuations had huge impacts on the city over the years before the industry finally shrunk for good. It took years for the city to adapt, but it's finally coming around with a more diversified economy. The result is a city that approaching the greatness of those times when steel demand was high but with a much lower risk of the busts when steel prices tumbled. Alberta feels a lot like Hamilton in the 80s, and the fact that they're not looking for alternatives means they stand a good chance of going through exactly what Hamilton had to endure for 25 years. The question then is whether or not the province has the right factors in play to actually rebound like Hamilton has.

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By Crispy (registered) | Posted October 25, 2019 at 07:40:49

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By Ryan (registered) | Posted October 25, 2019 at 09:18:52 in reply to Comment 130434

Trudeau has consistently supported building the Trans Mountain Pipeline despite his lofty talk about the climate emergency. Not that it has endeared him to Albertans one bit.

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By Crispy (registered) | Posted October 25, 2019 at 12:49:56

Better get on that. Cortez says we only have 12 years. Probably 11 now.

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By beancounter (registered) | Posted October 25, 2019 at 14:37:09

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By Ryan (registered) | Posted October 28, 2019 at 12:18:00 in reply to Comment 130437

I'm tempted to Rs;dr this post, but let's play ball.

Like most humans, AOC occasionally engages in hyperbole as part of her rhetoric. Normal people understand this, while hyper-partisan Republican operatives pretend not to understand what she's doing so they can attack her.

What Sanders, Gore et al. were warning about in the 1980s and 1990s was that if we did not act meangingfully to reduce carbon emissions, we would not be able to prevent global warming. And they were correct: the average global temperature is already around 1 degree Celsius warmer than it was at the start of the industrial era, and half the increase has occurred in the past 30 years.

What the IPCC is warning now is not that we have a decade or so to prevent global warming - that ship has already sailed - but that we have a decade or so to prevent catastrophic runaway global warming due to tipping points in Arctic ice loss, thawing permafrost, larger, more extreme wildfires and so on.

You can tell RedState is being disingenuous here when they cite Katharine Hayhoe in defence of their thesis that we need to calm down, since Hayhoe is actually saying, "Every action matters. Every bit of warming matters. Every year matters. Every choice matters." Hayhoe doesn't like the 10-12 year deadline because she worries that it will suggest a lack of urgency, not an excess of it.

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By Crispy (registered) | Posted November 14, 2019 at 14:25:09 in reply to Comment 130439

we're done reading the mansplaining trash from myopic white bros who do not speak for those on the front lines

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By ASmith (registered) | Posted December 16, 2019 at 22:34:58

Between 1993-2000, oil averaged less than $20 USD/barrel. So, let's look at Alberta's GDP (Chained 2002 Dollars [https://www150.statcan.gc.ca/t1/tbl1/en/cv.action?pid=3610031201#timeframe] ) vs Canada's during this time frame...

Canada $834.2B - $1,100.5B, 4.03%/yr. Alberta $107.3B - $144.9B, 4.39%/yr.

Now let's look at both GDP's between 2000-10, when oil rose to over $140USD/ barrel...

Canada $1,100.5B - $1,324.9B, 1.87%/yr Alberta $144.9B - $183.3B, 2.38%/yr

As we can see, Alberta's economy outpaced Canada's in both periods. Oddly enough, we also see that Alberta's economy grew much slower in the second period, even with rising oil prices. I couldn't find Alberta oil production going back to 2000, so I used Canada's as a proxy (https://tradingeconomics.com/canada/crude-oil-production). Between 1993-2000, Canada's oil production output grew by 3.2%/yr. Between 2000-2010, it grew about the same.

It gets weird here. Between 2010-2018, Canada's oil production grew from 2.5M barrels - 4.5M barrels. Assuming Alberta grew as fast as the national avg, let's look at Alberta's real GDP between 2010-18...

1993-2000: Canada's oil production up 3.2%/yr, Alberta real GDP up 4.38%/yr. 2010-2018: Canada's oil production up 7.6%/yr, Alberta real GDP up 2.58%/yr.

It's obvious Alberta, whatever people say, doesn't require a booming oil industry to grow. That said, Alberta did benefit from the right economic environment between 1993-2000. Let's compare some metrics in the two periods...

1993-2000: Gold price stayed around $400CAD/ounce. Prov exp's grew by 1.76%/yr. 2010-18: Gold rose from $1,125CAD/ounce - $1,625. Prov exp's (2008-16) grew by 3.33%/yr

So, between 1993-2000, even with higher interest rates (explains why loonie was strong vs gold) and tight fiscal policy, Alberta's economy boomed. Fast forward to 2010-18, when interest rates were very low (explains loonie's weakness vs gold) and higher prov spending, Alberta's economy grew about half as fast as 93-00.

Bottom line, Albverta doesn't require an ever expanding oil sector to grow, but it does benefit from the old fashioned economic policy of sound money and limited govt.

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