Column / Don Newman

Has reality finally hit the oil industry? And if it has, will the Alberta United Conservative Party, Premier Jason Kenney and the national Conservative Party follow suit? Will fighting a rearguard action to protect the oil patch from change and entrench the industrial status quo continue indefinitely? 

Over the years, oil and natural gas have made Alberta incredibly rich. So rich, it alone among the provinces did not need a provincial sales tax even as it enjoyed the lowest personal taxes and the highest level of services of any province. And despite occasional bumps when oil prices would suddenly drop, Albertans thought it would last forever. Since the 1980s, every time world oil prices dropped, they rebounded. Alberta quickly recovered and the cash came rolling in again. 

But now things have changed. It started in 2014. That happened when oil prices fell and they haven’t yet come back to where they were when the downward run started. And they won’t come back to those lofty heights over $100 a barrel any time soon—if ever. Even though the looming price drop was clear to many people, not many of those people lived in Alberta. They continued to believe oil prices would remain high, and that a number of pipeline proposals to get Alberta’s oil to the Pacific Coast in British Columbia or through the United States to the Gulf of Mexico in Texas would become reality in spite of receding social license, growing political costs and, perhaps most fateful of all, global investment trends.

In retrospect, it seems like an act of almost wilful blindness not to see the possibility of what was likely to happen. In July 2014, when oil prices were over $100 a barrel, a breakfast meeting of top politicians and oil industry leaders at the Calgary Stampede was told some disquieting news by an out-of-province forecaster. His message: Neither the Keystone pipeline through the US nor the Northern Gateway pipeline to Kitimat on the northern B.C. coast were likely to get final approval and be built. Worse for the assembled audience was the final prediction: Within a year the world price of oil could fall to $50 a barrel.

The immediate reaction was a moment of stunned disbelief and then to attack the messenger. Both pipelines would go ahead, he was told, and oil would never fall below $100 again. I know that’s what happened because I was the messenger. And the prediction was correct. The price of oil went into a rapid decline over the next six months, and later, Enbridge dropped plans for Northern Gateway in the face of environmental and Indigenous opposition.

But now things have changed even more definitively. The company proposing Keystone has pulled the project. That company earlier changed its name from Trans Canada Pipelines to TC Energy to make it sound less “foreign” to US regulators, but President Joe Biden cancelled the approval permit anyway under intense pressure from American environmentalists. The cancellation came in June, the same month that the five biggest producers from the Alberta oil sands announced they were cooperating to form the Pathways to Net Zero partnership to work on achieving Canada’s target of net-zero” greenhouse gas emissions by 2050. At least one of those pathways is increased carbon capture projects, which take the emissions produced in the oil sands and forces them underground and out of the atmosphere.

The realization that not all pipelines are good and that the oil industry is going to have to be responsible in fighting global warming are welcome changes to many Canadians. Not so sure is Premier Kenney, who is threatening litigation. Not so sure either is the federal Conservative Party. At a virtual convention earlier this year, the membership voted down a resolution saying the party recognized that climate change was a serious environmental threat. They defeated that resolution, although two days earlier new party leader Erin O’Toole had devoted a major part of his keynote speech to stressing that climate change is serious. The delegates’ repudiation of both their leader and climate change was an embarrassment.

Conservative politicians from Alberta have fought to protect the oil industry because it has been their huge benefactor. But now the industry is realizing that things have permanently changed and will likely change even more as the politicians change with it. Will Alberta stop clinging to a fading past and use its vitality and vision to create a new economy that still has oil and gas, also other forms of energy and 21st century industries to fuel its economic growth? For Albertans, and us all, that is the hope.  

Policy Contributing Writer and columnist Don Newman is a lifetime member of the Parliamentary Press Gallery and author of the bestselling Welcome to the Broadcast.