Sunset on the Oilpatch

The decline in oil prices to the sub-$50-per-barrel level may not be a pleasant experience for those of us here in Alberta, especially the Progressive Conservative rulers of our province, but it does offer the potential for what might be called a useful teaching and learning moment for other Canadians.

Specifically, it sends a message to people outside this province, who have been subjected for years to a stream of propaganda about how they must adopt the economic policies that prevail in Alberta or else, just how badly, in reality, this province is run.

Albertan leaders, not to mention the operators of far-right think-tanks and the under-aged denizens of the Prime Minister’s Office, have been scolding Ontario and Quebec in particular, plus Ottawa and the honourary easterners in British Columbia too, about the need to have far lower taxes, fewer taxes and “flatter” taxes, just like we have here in Alberta.

As for the Atlantic provinces, we looked down our noses at them for their “culture of dependency,” or, as Calgary MP and Canadian Prime Minister Stephen Harper famously put it, their “defeatist attitude.”

Here in Alberta this has given rise to the supremely annoying meme that, because we all have to pay federal taxes and because other provinces less persuaded by our prevailing market fundamentalist ideology insist on maintaining a more reasonable level of public services, we Albertans are paying for their social programs. The corollary to this fatuous notion is that they should stop at once.

Now, all of a sudden thanks to the precipitous decline in oil prices, your self-appointed Albertan emperors are revealed as being, if not completely naked, at least rather less warmly clad than one ought to be in a climate that can suddenly become very cold. Indeed, who is freezing in the dark now?

Instead of the emperors of market fundamentalist prosperity, to whom you-all had better pay attention and right snappily, we are revealed as prodigal whining winners of the petro-lottery, who have gone and pissed away yet another oil boom, this time the one we prayed to God on our sanctified bumper stickers to send us, and which He obligingly did.

And what mechanisms do we have in place to see us through this crisis? Not a fair taxation system or, God forbid, a sales tax. No indeed, in fact, that’s exactly what we’ve been lecturing you about.

Not a savings fund like they have in Norway — that would have meant charging oil companies more than they wanted to pay for the stuff, and we all know how the energy industry reacts to that!

Not diversification in our economy — we haven’t really done anything like that since Peter Lougheed was premier, although Don Getty tried a bit and it didn’t work out very well. Remember how the role of government shouldn’t be “picking winners and losers”?

Well, there’s always agriculture — leastways, if we haven’t used all the water for hydraulic fracking. And more pipelines, please! Though how that’s supposed to employ and support a projected population of five million is not entirely clear, especially if the economics of the pipelines stop making sense to the companies that want to build them.

Suddenly, in a matter of weeks, we residents of the land where all budgets must be balanced are told we have gone from the sunny promise of a blossoming surplus to the depressing news that we face four or five years of burgeoning deficits. All because the price of oil fell farther than “anyone” expected.

What an astonishing development! Petroleum prices go up and down, sometimes driven by very small changes in supply and demand. In fact, they’re extremely volatile. Who knew? Well, apparently not the brainiacs in the government of Alberta.

And what is our plan to deal with it? Well, cutting public services, of course, just like you should, and getting down on our knees and humbly praying for $100-plus-per-barrel oil prices to return as soon as possible. But certainly there will be no new taxes!

In the mean time, we will just have to grit our teeth and watch those high-tax, high-spending jurisdictions like Ontario, Quebec and even B.C. — the ones who benefit from relief in their Dutch Disease symptoms when our mighty petroleum industry stops pushing the Loony to nosebleed altitudes — see their economies revive as ours suffers from fainting spells.

Heaven help us if they start to lecture us on the need spend more on social services so we won’t export our unemployment problem back to the Maritimes and Quebec every time the price of oil jogs downward, which is what we mostly did the last time a boom here went bust. We might just stroke out from apoplexy!

In fact, our circumstances are not unique. Pretty much the same thing has been happening to the relative economic positions of low-tax, conservative Texas and high-tax, relatively liberal California, and for pretty much the same reasons.

As the New Yorker magazine explained in a useful piece comparing California and similarly self-righteous Texas, “these days … no one is talking about the lessons California should learn from Texas.”

Not only is California’s economy improving, but its budget is balanced thanks to a taxpayer-approved tax increase and a progressive income tax system, while Texas “is grappling with the collapse in oil prices.”

If this sounds familiar, it’s not as serious in Texas as in Alberta because the vastly more numerous Texans have in fact a much more diversified economy, the New Yorker explained, not to mention higher oil and gas royalties. Also, “Texas is also more reliant on the sales tax nowadays, which could be helpful if lower gas costs lead people to spend more money elsewhere.”

Of course, as the New Yorker’s reporter explained, “Texas’s outperformance of California had a lot to do with factors beyond the control of politicians …” Just as in Canada, as a matter of fact.

Our favoured position here in Alberta has had far more to do with winning the petro-lottery than our crazy tax policies, the lowest royalties on the planet or our tendency to do whatever the Fraser Institute instructs us to do, no matter how ridiculous.

Unlike other provinces that didn’t share our perverse good fortune, Alberta’s situation is made far worse by our government’s poor planning, or complete lack of it in many areas.

We need to fix that, and I’m only saying that so we won’t hear it from someone from Ontario. Either that, or oil prices need to go back up again, which by the sound of it is Premier Jim Prentice’s only plan.

This post also appears on David Climenhaga’s blog,

David J. Climenhaga

David J. Climenhaga

David Climenhaga is a journalist and trade union communicator who has worked in senior writing and editing positions with the Globe and Mail and the Calgary Herald. He left journalism after the strike...