Do you remember when oil prices were strong? In those days, Conservatives ruled in both Ottawa and Edmonton.
Now that Rachel Notley's NDP has taken power in Alberta, things have gone off the rails. And Trudeau! Surely everyone knows his dad's National Energy Program was the reason for the last oil crash.
Absurd as those statements may appear to those who understand the workings of global markets, there are already signs that right-leaning supporters of the oil and gas industry are busy seeking political scapegoats. It may be in vain, but Canada's current political leaders must tread carefully if they wish to avoid taking the blame.
- Stock markets tumble as loonie falls to new 13-year low
- Kevin O'Leary's $1M pledge won't entice Rachel Notley to resign
My erstwhile CBC colleague Kevin O'Leary, who spent many years on the public broadcaster's payroll, fired a shot at the Alberta premier this week, asking Notley to resign before he would put money into the province.
"I'll invest $1 million in Canadian energy companies if out of grace and for the absolute good of Canada, the premier of Alberta resigns," he said on a radio talk show.
"O'Leary attributed layoffs and the plummeting dollar on the inexperience of Notley's government and poor policy choices, specifically, hikes in corporate tax rate and uncertainty about royalties," said the Toronto Star article that reported the comments.
The idea that the fallling loonie has anything to do with Notley and her NDP government is clearly absurd. It is less clear whether planned changes to oil royalties and taxes have any effect at all on Alberta's slumping economy, but if so, it is certainly microscopic compared to the continuing collapse of oil prices from over $100 US a barrel in 2014 to around $30 US today.
O'Leary is not alone of course. Conservatives in the oil industry are watching for any opportunity to point fingers at policy by Notley or Liberal Prime Minister Justin Trudeau as the reason for the dire troubles the sector is currently suffering. If nothing else, their scrutiny diverts attention from their own failure to foresee the crash in oil prices, now so obvious to everyone.
- Alberta Premier Rachel Notley tries to douse dragon's fire
- Oil price decline could lead to global shocks
For anyone who remembers back that far, in some ways it is like a rerun of the 1980s global oil crash. That was the last time the Alberta economy was shattered by a drop in the world price of energy.
Even today, in the folk wisdom of Alberta and Saskatchewan, Justin's father, Prime Minister Pierre Elliot Trudeau and his National Energy Program are still blamed for the debacle. There is no question that the NEP created a real rift between Alberta and the federal Liberals that has never really healed.
As the CBC host Barbara Frum said at the time, recorded in this archived radio interview: "One of those arguments [Premier Peter Lougheed] makes, of course, is that you're just grabbing at his wealth to make up for your deficit."
Provisions of the NEP did cut into Alberta's share of oil revenue, but it is a stretch to say that it was the main cause of the subsequent crash in oil, jobs and house prices.
The idea, misremembered to this day, is that the NEP killed the Alberta economy. Just like today, the real damage was done by the world price of oil that in 1980 had hit a peak of $35 US a barrel (over $100 in today's money) but then began a long fairly steady decline to about $10 by 1986. That sounds familiar.
In retrospect, some of the provisions of the NEP might have helped us in our current mess. One, to build a national oil company like Norway's Statoil, could have left us with a multibillion-dollar nestegg.
And if Canada had paid slightly lower prices for oil during the boom of the last 10 years, and slightly higher prices now, there is a possibility Canada's non-resource exports would not have been so badly damaged by Dutch disease.
As Bank of Canada governor Stephen Poloz has warned, even with the low loonie, it could take years for Canada's industrial economy to rebound. Perhaps even Alberta would be better off now if its Conservative government had raised taxes and royalties, sharing the wealth and becoming less of a one-industry province.
Trusting the free market to build a capitalist paradise where Canada is an energy superpower doesn't seem like such a great idea when the world price of oil dips below $30 US.
As is often the case in Canadian politics, governments are pitched out not when things are going great but when something has gone sour. Both in Alberta and in Canada, new governments must deal with a series of economic crises that can quite fairly be attributed to the policy of their Conservative predecessors.
But in the world of politics, not being at fault doesn't mean you won't take the blame.
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