Deirdre Mitchell MacLean
“Today we have seen, for the first time in history, our energy prices trading at negative values. Western Canadian Select trading below zero,” Kenney said during the economy-first daily Covid update with Dr. Deena Hinshaw.
“This is, sadly, something I predicted was quite possible a month ago.”
As many in Alberta no doubt recall, a month ago Jason Kenney and his government voted to pass a budget that relied upon increased revenue from personal, and property taxes, as well as increased oil and gas royalties based on $58/bbl oil.
A bold move on the edge of a global pandemic, to be sure, but Alberta’s Premier has a vision – at least so far as one can have any vision within a dark structure.
The writing was on the wall: Alberta – having not quite managed to pull itself out of a recession that only seemed to deepen during the Premier’s first fall – and its oft-criticized reliance on oil and gas was about to become a cautionary tale.
Releasing their first budget in October 2019, the United Conservative government relied on oil revenue to pay the bills and promptly received a credit downgrade. Kenney accused Moody’s of being influenced by European environmentalists and ignored the dissenters.
The party that was elected to turn Alberta’s tide, and economy, around had no plan. They cut investment incentives in favour of a broad tax cut for corporations. They cut tax credits for film, tech, software development, and artificial intelligence – basically any of your future-focused industries.
And they promoted oil.
A nine-person team was gifted a $30 million dollar per year budget to advertise for and promote the oil industry.
Kenney said there would be new offices (and one would assume staffing for them) in British Columbia, Ottawa, and Quebec – to promote the oil industry.
There were extra tax cuts for rural natural gas producers; “temporary” for 2019 but extended through 2020. There was no help from the government when oil companies refused to pay their property taxes leaving municipalities around the province on the hook for over $100 million.
But it still wasn’t enough to get oil to put Albertans back to work.
On February 27, when Kenney and his government tabled a budget so full of champagne wishes and caviar dreams that a collective jaw drop was heard across the province – he said; but wait -there’s more.
“I’m here to tell you today, as the premier of this province, that we are prepared to do what is necessary to ensure a future for this province’s economy, including for women and men, Indigenous people and new Canadians, and everyone who depends upon, either directly or indirectly, our energy industry,” Kenney said.
On February 27, Hubei province was under lockdown. Italy was entering the worst of the pandemic. Cities were declaring states of emergency, countries were declaring states of emergency and Jason Kenney and his team had decided to tear up an agreement with doctors and the Alberta Medical Association because the Alberta government didn’t want to wait around for negotiation with a non-oil lobby.
The official opposition balked. Economists were cautiously concerned.
But things didn’t really start to chill until March.
On March 6, Alberta announced its first COVID-19 case.
Also, on March 6, oil prices dipped. OPEC and Russia (OPEC+) had failed to come to an agreement to continue a voluntary reduction in oil production. Seems they had made an agreement in 2017 during the U.S. shale boom to reduce production and stabilize oil prices. As it turned out, that agreement was set to come to an end on March 31, 2020.
The other shoe dropped on March 7 when Saudi Arabia declared a price war with Russia and decreased its oil below market value. Russia, unfazed, retorted that they could survive $15 -$20 oil for “six to ten years”.
The United Conservative Party voted to pass their budget on March 18 – three days after closing Alberta schools and day cares – with its $58 oil projection and *billions* from tax revenue.
The province promptly received another credit downgrade and the party hadn’t even been in government for a year.
Kenney said his government would “spare no expense” to get us through the pandemic – unless your job happens to be education support staff – but if you have a hundred billion in assets with a multi-billion dollar profit margin… Alberta has billions of dollars for you.
The negotiation with TC Energy (formerly Trans Canada) took six months, Kenney said on March 31 – which is impressive because the Kenney government couldn’t manage two months with the doctors.
“Today, Albertans take charge of their economic destiny,” Kenney said, announcing Albertans were now in the pipeline business, happy owners of $1.5 billion in TC Energy equity shares and guaranteeing $6 billion in loans next year – to create 7,000 short-term construction jobs.
It was a smart investment, Kenney said. Any investment would have risk, he said, “regulatory or legal”.
On April 15, a Montana district judge issued an order that forbade TC Energy from disturbing waterways until a further review could be completed. Kenney said he hadn’t heard about it – and sure, I guess, it wasn’t his money on the line.
While the premier managed to predict that oil could be worth less than the barrel it’s stored in, he hadn’t predicted an economic shutdown, leading a landlocked province, or that he had absolutely no business promising jobs, economic recovery, or pipelines.
This post contains opinion.
Deirdre is a freelance writer physically distancing in southern Alberta.
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