The Alberta economy draws its every breath from the oil and gas industry.
It follows that the political fortunes of those who govern, or would like to govern, depend closely on Big Oil.
The government of the day never gets to really see the forest for the trees — true economic diversity — because it’s very busy keeping Big Oil happy in order to secure re-election.
The latest self-serving desperate reaction by Premier Ed Stelmach and his party is proof of this.
Here in Alberta, where we have a Conservative government more concerned about being bled dry by the no-longer upstart, more right-of-centre Wildrose Alliance Party, the umbilical connection between party funding and the petroleum industry is inseparable.
Royalty rates are no longer about getting a fair return for Albertans. Royalty rates are handy little political tool for government to get re-elected. Such was demonstrated last week when Stelmach announced royalties on oil and gas would be reduced.
The government will cut the maximum royalty rates for conventional oil from 50 per cent to 40 per cent and for natural gas from 50 per cent to 36 per cent and a temporary incentive program that assessed a five-per-cent royalty rate on new oil and gas wells will become permanent. The changes take effect next January.
Stelmach said the changes will benefit Albertans in the long-term. “The piece of the pie may be smaller, but we’re growing a much larger pie.”
Only a couple years ago, his government changed the royalties structure (which hadn’t been changed since 1992) so that Albertan’s would get “a bigger piece of the pie.”
For its part, Wildrose is taking full advantage of a government that is indecisive and unpredictable. Wildrose says the changes to royalties fall short of what’s needed, should be implemented immediately, and the Conservatives should “apologize to the industry for the mistakes the PC government made, and for the anxiety and upheaval that they caused Albertans.”
They fall over each other.
When Stelmach first saw to increased royalties, he was trying to please Albertans in general. Last week, he was trying to please the oil industry, which has been turning to Wildrose like bees to honey.
The threat of completely losing oil industry support, particularly in Calgary, has made the Ed Stelmach Tories — even with their massive majority win just two years ago — tremble.
When royalties were increased, the oil industry warned there would be major negative economic consequences for Alberta. We’ve seen the economy get hacked by a recession at the same time oil companies, upset about the new royalty regime, left to do business where the grass was greener.
Thanks in large part to the increase royalties which took affect last year, we also saw the incredible stellar rise of Wildrose, a fringe party when it formed two years ago, but now with three MLAs in the bag and, incredibly, polls showing them pulling ahead of the Conservatives.
It may be that there isn’t anything Stelmach can do now to turn the tide against him and his Conservatives because Big Oil has already moved on. It may be that a Wildrose tsunami is just offshore, gathering strength not just from the Conservative’s spinning around on royalties, but also from a general ineptness that’s hounded the Stelmach government.
The thing with this business of both Stelmach’s Tories and Danielle Smith’s Wildrosers trying so hard to please Big Oil is that it really shows who has the hammer.
Mary-Ann Barr is Advocate assistant city editor. She can be reached by email at barr@www.reddeeradvocate.com or by phone at 403-314-4332.