The celebration of Alberta’s centennial on September 1 is being neglected outside the province. On the radio, we hear about gas prices at the pump, but the official Alberta centennial song is not getting much air time, and did you know that on request Premier Klein was writing people around the world to invite them to Alberta for the centennial fun?

It’s no secret petroleum and natural gas prices have gone high, and are headed higher. People do know Alberta is rich, and getting richer. Talk of sharing the wealth with the rest of the country is said to follow shortly. The Premier Ralph Klein we do hear about trumpets he wants none of it. However, instead of talking about protecting the wealth from greedy central Canadians, his government should be planning carefully how best to use the remaining conventional oil and gas reserves over the next 100 years.

The reality is that the benefits of oil and gas deposits have been shared unequally. But the problem is not how Albertans get richer at the expense of Ontario, or lose out to central Canada. Lost in discussion of what the centennial web site calls The Romance of Oil and Gas are the real issues of public resource wealth: who owns it; how much is produced, and how fast; who gets the output, and how are the proceeds divided up; and what role and responsibility does the industry have in protecting the environment and sustaining society.

As the beneficial owners of the resource, the people of Alberta have been shortchanged. Successive governments going back to Ernest C. Manning, and Social Credit, and continuing through Conservative regimes of Peter Lougheed and Ralph Klein, have eschewed the one policy guaranteed to give Albertans the biggest share of petroleum wealth: direct ownership. Instead the province has leased the rights to drill and explore, and charged minimal royalties on oil and gas production. Private companies take the profits, and with rising prices hold the rights to extraordinary gains.

The notable exception is down in the southeast corner of the province: the sunny city of Medicine Hat. Natural gas deposits were noted at the time the CPR line came in 1883. The first manufacturing in Western Canada took advantage of the gas, and city council was wise enough to start gas and electricity utilities, and not to privatize. So the city has about the lowest property taxes in the country, but not the lowest levels of services. It uses the profits from municipally owned utilities to finance services provided through city hall.

Oil and gas are nonrenewable resources. It matters how fast the resources are drawn down. That is why the private market model is so inappropriate for planning the future. Market pricing cannot create oil and gas reserves in Alberta, or take into account today the amount of energy available over the next 30 years, let alone 100.

The rate of resource exploitation matters greatly to the environment. Putting oil sands development on steroids to satisfy U.S. demands for SUV fuel makes no sense when the rest of the world has recognized the danger due to global warming.

The Alberta model is in fact the NAFTA model where the ownership and management of the resource was given away to oil companies, largely American-owned, by the federal government in trade negotiations first concluded in 1988, and renewed in 1994. For Alberta to get back ownership of the resources, under NAFTA terms, all of Canada would have to compensate the American owners, not just for the market value of their holdings, but for expected future profits as well. In other words we would have to pay them twice.

For Canada to control the rate of exploitation of oil and gas resources we would have to tax exports, but we gave up the right to levy export taxes under NAFTA.In times of shortage, under NAFTA, Canada must share energy resources with the U.S. proportionate to past usage. Even Albertans could freeze in the dark before the century is out unless NAFTA is terminated.

Under NAFTA rules the energy sector is the only non military industry that can receive government subsidies. So Canadians subsidize the production of the resource for the American consumer. Trade negotiators would call that a concession to the American side; as Canadians watch the remaining “cheap to find and produce” oil and gas go increasingly South of the border, they may find words stronger than stupid or idiotic to describe it.

A good next centennial project would be to call for ideas on how to best use Alberta’s energy resources to benefit the province in the future. Enriching foreign owners of the resource today, so that Albertans can pay more tomorrow, thanks to a treaty negotiated by Ottawa, would not likely rate too high on the list.

The oil business raised the rate of economic growth in Alberta after 1947 when the first well came on stream in Leduc. But the presence of oil and gas reserves does not guarantee the quality of life. For the next 100 years that will be the important issue for Albertans. After 100 years, it is still next year country on the prairies.

Happy birthday Alberta.

Duncan Cameron

Duncan Cameron

Born in Victoria B.C. in 1944, Duncan now lives in Vancouver. Following graduation from the University of Alberta he joined the Department of Finance (Ottawa) in 1966 and was financial advisor to the...