rabble blogs are the personal pages of some of Canada's most insightful progressive activists and commentators. All opinions belong to the writer; however, writers are expected to adhere to our guidelines. We welcome new bloggers -- contact us for details.

OPEC sets up the rollercoaster, Albertans take a ride (again)

Please chip in to support more articles like this. Support rabble.ca for as little as $5 per month!

Image: wikimedia commons

"You come from capitalist nations. You know what the market does. For any commodity it goes up and down, up and down." -- Saudi Oil Minister Ali al-Naimi

Contrary to the expectations of many analysts, OPEC (read Saudi Arabia) decided it would not reduce its 30 million-barrel-a-day production quota in order to prop up oil prices.

Oil prices dropped by 40 per cent. Oil companies lost $67 billion in market value in two days. And we're firmly locked in a downward trajectory.

Why did the Saudis do it?

Eighty per cent of the Saudi government's revenue comes from oil production. This decision hurts them more than it hurts us. Why did they do it?

Some say the Saudis are retaliating against Russia for supporting the al-Assad regime in Syria. Others say the Saudis want to teach the U.S. a lesson by crushing U.S. shale production.

Saudi oil consultant, Mr Al-Husseini, says this is nonsense. It's just business -- a market decision designed to curb high-cost production wherever it lies, Brazil's offshore fields, the U.S. shale oil plays and Canada's oil sands.

Oh oh.

Mr Prentice's plan

Oil and gas revenue (taxes and royalties) makes up 21 per cent of Alberta's budget. Oil prices tanked right after Mr. Prentice took office creating a $7-billion hole in the budget. His by-election promises of 230 new schools, multi-million dollar flood relief plans, hundreds of long-term care beds and a chicken in every pot are in jeopardy.

Never mind says Mr. Prentice, here's why Alberta will survive the 2015 crash.

Moody's likes us: Mr. Prentice boasts that Moody's gave Alberta its highest rating because it likes Alberta's low tax regime, strong financial assets and a strong balance sheet.

So what.

Moody's is an investment service. It rates government investment risk like Michelin rates restaurants. A Michelin 5-star rating means the food is good, not that the restaurant can balance its budget.

Similarly a triple A rating from Moody's means Alberta is a good credit risk and can borrow more money than say, Detroit. It's not remotely relevant unless Mr. Prentice intends to fill the $7-billion budget hole by borrowing until Moody's downgrades Alberta to junk bond status.  

Albertans must tighten their belts: Mr. Prentice says, "We will be making some tough decisions, and the impacts will be felt in this province. However… we are in it for the long term (god I hope so!). The job of building this province is not finished, (no kidding!) and the long-run advantage of advancing long-terms solutions is now before us (what?).

He concludes with a flourish: "…Albertans are resilient, and there is no province better positioned to weather the storm of which I speak."  Actually there is. It's called Saskatchewan. It too has a triple-A rating from Moody's and oil royalties only account for 11 per cent (not 21 per cent) of its total revenues, making it less vulnerable to plummeting oil prices.

Stripping away the Churchillesque language, Mr. Prentice is saying that government services will be slashed and we'll have to suck it up. So all you old, sick and frail people, toughen up. And you young people, figure out how to teach yourselves.

Alberta's bitumen must reach tidewater: Mr Prentice says continued investment in schools, hospitals and roads is contingent on our ability to "seize opportunities in the Asia-Pacific Basin." He stresses that tidewater access -- east, west, north or south -- is essential because it gives producers access to world prices (which, you may have noticed, have tanked).

One tiny little problem: Mr. Prentice cannot make it happen and Prime Minister Harper just gave notice that he's washed his hands of the whole thing. So now what?

There will be no change to Alberta's tax structure: The 10 per cent flat tax on personal and corporate income and the absence of a sales tax is a sacred cow. End of discussion.

Somehow none of this is very comforting.

A new vision

After countless booms and busts (what Saudi Oil Minister al-Naimi quaintly calls "ups and downs") Albertans are tired of checking with OPEC every time they need a new school or hospital.

Unfortunately 30 years of symbiotic existence with energy companies warped the government's sense of self. It cannot distinguish itself from industry. It's become industry's mindless cheerleader. Its premier says idiotic things like: "Alberta is a price taker." Alberta is a government. The government is not a player in the energy marketplace.     

OPEC's decision to maintain production gives Mr. Prentice an opportunity to remake government. Instead of protecting Big Oil from OPEC, Mr Prentice should protect Albertans from Big Oil by revamping Alberta's revenue structure and diversifying our economy so that Albertans will never experience another crash like the crash of 2015.

Just because OPEC set up the rollercoaster doesn't mean we have to ride it.

Thank you for reading this story…

More people are reading rabble.ca than ever and unlike many news organizations, we have never put up a paywall – at rabble we’ve always believed in making our reporting and analysis free to all, while striving to make it sustainable as well. Media isn’t free to produce. rabble’s total budget is likely less than what big corporate media spend on photocopying (we kid you not!) and we do not have any major foundation, sponsor or angel investor. Our main supporters are people and organizations -- like you. This is why we need your help. You are what keep us sustainable.

rabble.ca has staked its existence on you. We live or die on community support -- your support! We get hundreds of thousands of visitors and we believe in them. We believe in you. We believe people will put in what they can for the greater good. We call that sustainable.

So what is the easy answer for us? Depend on a community of visitors who care passionately about media that amplifies the voices of people struggling for change and justice. It really is that simple. When the people who visit rabble care enough to contribute a bit then it works for everyone.

And so we’re asking you if you could make a donation, right now, to help us carry forward on our mission. Make a donation today.


We welcome your comments! rabble.ca embraces a pro-human rights, pro-feminist, anti-racist, queer-positive, anti-imperialist and pro-labour stance, and encourages discussions which develop progressive thought. Our full comment policy can be found here. Learn more about Disqus on rabble.ca and your privacy here. Please keep in mind:


  • Tell the truth and avoid rumours.
  • Add context and background.
  • Report typos and logical fallacies.
  • Be respectful.
  • Respect copyright - link to articles.
  • Stay focused. Bring in-depth commentary to our discussion forum, babble.


  • Use oppressive/offensive language.
  • Libel or defame.
  • Bully or troll.
  • Post spam.
  • Engage trolls. Flag suspect activity instead.