Suddenly, Alberta thrown on mercy of Ottawa: the importance of Kenney, oil/gas industry being better at politics

Perhaps CEOs should think long and hard about their politics – and how they are represented nationally by Kenney – when world returns to normal

*Readers are reminded to watch the full-length video interviews integrated into this column.

According to the Globe and Mail, a $15 billion support package is coming this week for the Alberta-based oil and gas sector. Will more be forthcoming if needed? Maybe not, given how poorly Alberta and industry leaders have conducted their relations with the federal government.

Ever since Jason Kenney became the leader of the United Conservative Party in 2017 he has been criticizing Justin Trudeau and his Liberal government in the most intemperate language. He did so during the April, 2019 Alberta election, during last fall’s federal election while campaigning openly in Ontario for the Conservative Party of Canada, and as recently as last month when he blamed Trudeau’s policies for scaring away Teck Resources’ $20 billion oil sands project.

The hydrocarbon industry has stood by Kenney’s side, cheering him on.

Then, the world changed. The COVID-19 pandemic emerged as a global calamity and in early March, Saudi Arabia and Russia kickstarted a crude oil price war. Just like that, the mighty Masters of the +15 Universe – an inside downtown Calgary joke – are reduced to grovelling cap in hand to the federal government and the politician they love to loathe, Justin Trudeau.

Kenney, who once opined that the junior Trudeau has the intellectual depth of a finger bowl, mused last week about a relief program similar to the American Troubled Asset Relief Program (TARP) that enabled Washington to buy shares in floundering banks and automakers after the 2008 financial meltdown. Canada employed a similar strategy for car manufacturers.

In fact, 65 Alberta corporations sent a letter to Ottawa requesting a TARP-style package, according to the Globe and Mail. “Our companies collectively represent over 100,000 working Canadians,” the letter said, urging “all levels of government to work together toward one goal: no Canadian, household, business or organization is left worse off than where they were when this crisis began.”

Jeff Tonken, chair, Canadian Association of Petroleum Producers.

Never ones to be shy and operating on the principle of “don’t ask, don’t get,” the CEOs suggested the federal carbon tax be suspended, as well as all income tax at every level.

Imagine the teeth-grinding angst such a proposal must have set off in the oil and gas corporate boardrooms? Astute readers will recall that the Petroleum Club – where the 1980 National Energy Program and the Prime Minister’s father are still routinely cursed – set used to refer to the PetroCanada building as “Red Square.” Asking a Trudeau to buy equity in their companies is a pretty good indicator of the CEOs’ desperation.

The oil companies should be thankful the Liberals are pulling out the big red chequebook at all, given their opposition to federal climate policies, a number of key pieces of legislation (most notably Bill C69 and Bill C48), and their unabashed support for the Conservative Party of Canada during the last election. Prime ministers aren’t generally known for being so generous to their political opponents, but these are perilous times and the hydrocarbon industry makes up a big part of the national GDP, just over 11 per cent in 2018.

A reasonable guess might be that Finance Minister Bill Morneau – who before the 2015 election was CEO of an actuarial firm that advised pensions and probably knows a thing or two about how his former clients would be adversely affected by an oil and gas blowout – played a key role persuading his cabinet colleagues to go along with the plan.

The global exigency may save the oil and gas CEOs bacon this time, but perhaps they should think long and hard about how to conduct their politics – and how they are represented nationally by Kenney – should the world ever return to a semblance of normal.

Energi Media interviewed two political scientists, Professor Melanee Thomas of the University of Calgary and Professor Stewart Preset of Simon Fraser University, about

“It’s not the first time where you’ve got this kind of regional resentment from Western Canada. It is almost always rooted in arrogance that comes from being the most wealthy,” Thomas said, adding that British Columbia has felt similar alienation from the rest of Canada.

Prest argues that provinces generally want two things from the Canadian government, money and more independence. For decades, Alberta was wealthy enough that many citizens – including some leaders of the oil patch – could imagine a life outside Confederation, maybe even becoming the 51st state of the American union. No surprise, then, that since the downturn that began in late 2014, those same Albertans thought Ottawa was, perhaps deliberately, holding back the province and the industry.

“But if there’s something we’ve learned from the history of the Alberta oil patch is that what goes up always comes down,” he said, “and when it goes down, Alberta needs help and that standoffishness does not work anymore.”

There’s the rub, right? Belligerence, pugnaciousness, obstreperousness – call it what you will, but it’s a poor strategy if the pandemic and oil price war drag out for many months or even a couple of years, which is not an unreasonable scenario.

How many times might Alberta and the industry have to go to the well? If the answer is more than once, then maybe it’s time for Alberta and the industry to play a smarter political game.

As Prest and Thomas explain, the usual strategy is to build political alliances, cut deals, adroitly participate in the legislative process, and as a general rule, leave the cudgel at home in the garden shed. Another useful aphorism is that you catch more Canadians – and their politicians – with honey than vinegar.

Kenney and the CEOs – and their foot soldiers who run the various industry associations – have a chance to hit the reset button. No one will blame them if the parties work out a more collegial and fruitful process for confronting the dire challenges of the immediate future.

Albertans may even praise them if the province and its biggest industry fare better under a rapprochement. Seriously, it could happen.

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