Pity Alberta premier, Jason Kenney. The provincial government's favourite game, Blame Ottawa, has run out of steam. Michael Harris writes "it's Game Over for Kenney."
Before COVID-19 turned Times Square into a ghost town, shut down the NHL, and closed Parliament, the New York Stock Exchange, and the Taj Mahal, Kenney was making news directing elbows into Justin Trudeau’s grizzled beard — elbows sharpened by years of political skirmishing. He kept bugging Trudeau to concentrate on the economy. Alberta’s primarily.
It was the familiar harangue: Ottawa was failing the West and the energy sector, and it had to stop or else. Trudeau had other fish to fry, including extravagant promises on fighting climate change — promises he largely broke during his first term, and for which he was punished by voters in 2019.
After crushing Rachel Notley and the NDP in that year’s provincial election, Kenney turned his guns on the feds with a vengeance. His base was suffering from extreme economic angst. Nothing concentrates the mind like being out of work. Alberta’s premier had lots of targets: the hated carbon tax, the cancellation of the Energy East pipeline in 2017, and sluggish progress on the Trans Mountain pipeline expansion project.Reality Rains on Jason's Parade.
In the middle of mugging the feds, Kenney was hit by a double whammy for the ages. COVID-19 took the world by storm, crashing the stock market like a house of cards. And then there was the catastrophic drop in the price of oil after Russia, OPEC, and Saudi Arabia rumbled over the issue of cutting supply to prop up sagging prices.
Welcome to West Texas Intermediate oil hovering around $22 dollars U.S. a barrel -- less than a third of the price needed by Teck Resources to make its Frontier project in the tar sands viable.
And welcome to the truth about the tar sands and Jason Kenney. Turn out the lights, the party’s over. It has been for quite some time. This week, oil made from Alberta bitumen was going for just over $7 a barrel, discount and all.
The premier lives in the past, a place where successive Conservative governments relied on what they believed would be ever-increasing oil revenues; where you didn’t have to have a real Sovereign Wealth Fund like Norway’s; you didn’t need a sales tax; climate change didn’t exist; gas would always be cheap; and no one had ever heard of shale fracking.The Lights Dim and the Curtain Comes Down on the Wild Rose Theatre of the Absurd
Trudeau can’t be blamed for either COVID-19, or the catastrophic drop in the price of oil. There is only a ticking clock on fossil fuels as they overheat the planet, decades of bad resource management in Alberta, and Jason Kenney’s determination to carry on the tradition.
Simply put, the province has a lot of a resource that no one wants, and fewer institutions are willing to invest in as the carbon window closes on a dying industry. There is a reason that so many companies have simply sold their interests in the tar sands: Koch Industries, Royal Dutch Shell, Norway’s Statoil, and Marathon Oil. They can’t make money. Not making money doesn’t fit into anyone’s strategic plans.
There is also a reason that other companies like Imperial, ConocoPhillips, and ExxonMobil admit that billions of barrels of oil within their tar sands holdings will likely be left in the ground.
These are the stranded assets that the former governor of the Bank of England, Mark Carney, made headlines with a few years ago.
When companies can’t make money from their tar sands assets, and more and more banks won’t finance such projects, there is only one option left — the one Jason Kenney will likely choose: government will become the financier of last resort for a doomed industry.
Kenney has thrust the Batmobile into reverse. He is offering his electorate a ride back to a time when Barry Manilow was crooning Mandy, and Peter Lougheed was premier of Alberta. Just one problem. There is no highway to the past. Using public money to finance oil and gas projects through the Alberta Energy Company, the way Lougheed did nearly 50 years ago, is delusion on roller skates.Trudeau's Folly or Why Ottawa Should Stop Throwing Good Money After Bad
As for Justin Trudeau, it would be a major mistake to allow Premier Kenney to use the COVID-19 emergency to extract federal tax dollars for the fossil fuel industry. That doesn’t square with his promise to fight climate change. Besides, Ottawa already put one multi-billion dollar pipeline on the public tab, and that is one pipeline too many.