Laying It Out: A boom might save Kenney, but what’s it doing for you?

By Scott Schmidt on March 5, 2022.

As Premier Jason Kenney continues to celebrate Alberta’s all-of-a-sudden booming energy sector, complete with coat-tailing the Ukraine invasion to promote it, does your life feel less expensive?

As you watch the meter turn faster than ever, paying 30 cents more per litre than the most you’ve ever paid for gasoline, do you think about how everything is OK now thanks to oil prices?

How about when you open up that utility bill? Happy now?

Things are certainly looking up for Kenney, even if they couldn’t have been worse, and with a full-scale attack on his leadership underway by rival Brian Jean.

Some pundits believe energy prices have given the premier the gift he needs to not only secure “50% plus one” support at his April leadership review, but maybe even a 2023 election win that was starting to look like not even a kamikaze campaign could pull off.

They might be right, and this mini boom could be Kenney’s saviour. But is it yours? Is it Alberta’s?

Certainly not with the premier using it to bribe his way to a future in politics.

Celebrate, if you must, a boost in royalty revenues, which are admittedly going to reach records this year – conservative estimates peg it at about $11 billion more than 2021 – but what is this boom really providing to Albertans? Is balancing an underwhelming budget doing something specific for you, the citizen?

According to a report compiling data in 2020, roughly 70% of Alberta’s oilsands production is owned by foreign firms and shareholders. In fact, the five largest players – Suncor, CNRL, Cenovus, Imperial Oil and Husky Energy (now owned by Cenovus) – are all majority foreign owned, and alone account for 60% of Alberta’s bitumen production.

Companies with a majority Canadian ownership make up 1.5% of overall oilsands production, and U.S. shareholders – who own more than half – more than double their Canadian counterparts.

When oil prices skyrocket, the bulk of the money made here, leaves here. Sure, Alberta gets a few billion in royalties, but how does that stack up to other jurisdictions?

After taxes, fees and royalties, Alberta gets back about 32% of profits from its oilsands, which looks bad next to Australia’s 58%, but downright pathetic beside Norway (78%) and Saudi Arabia (85%).

There are differing ways to get there – Norway charges a 23% corporate tax versus Alberta’s 8% – but the bottom line is, other major oil-producing jurisdictions get a good deal for their resources. We don’t.

What about jobs? Surely this boom will mean an uptick, which in and of itself is good for the economy. Right?

Well, not so much. While oil, gas and mining accounts for about 6% of employment in the province, the share has declined by close to a percentage point over the past decade. Meanwhile, energy production as a portion of GDP increased from 23 to 26%.

It’s true jobs in the industry are returning to pre-pandemic levels, but those are still tens of thousands fewer than 10 years ago, and the return is occurring at about half the pace production is.

In short, jobs haven’t and won’t keep pace with production, a trend that will only worsen as companies bolster automation. Workers are expensive, and companies hate that.

About 143,000 Albertans were working in forestry, fishing, mining, oil and gas in December 2021, about 31,000 fewer than in 2013. Albertans working is a great thing, especially when they spend their incomes in local economies, but it’s a pretty big deal that, with or without a pandemic, the overall contribution from oil and gas workers is nearly 20% less effective than it was nine years ago.

So, Alberta doesn’t recoup as much as it should, and Albertans aren’t employed as much as they should be. But that doesn’t mean we couldn’t use the cash in a beneficial way.

There are all kinds of things we could put this money toward, from hiring back some of the 26,000 education assistants and support staff laid off at the start of the pandemic, to easing the rising cost burdens put on Albertans after utility and insurance caps were lifted by the UCP.

Instead, increases in spending are going toward things like more ICU beds to accommodate COVID’s next wave, or a curriculum change rejected by nearly every school board in the province. And even then, with total expenses budgeted at roughly the same amount ($62.1 billion) budgeted for last year ($61.9 billion), that added money for hospital beds or curriculum is coming out of other areas in the budget, not new revenue.

Instead, all of that goes toward eliminating the deficit, leaving it up to Albertans to decide if the idea of future savings is worth being broke today. Anti-deficit politicians love to talk about debt servicing costs, which are about $2.7 billion on $94.7 billion. Another $10 billion in debt would add $300-ish million to that.

Do Albertans still believe balancing the budget is for them? As you fork over double the usual amount for utilities, does that $300 million in savings lessen the blow? Is it even savings if we neglect other needs of today in order to have it?

Every time this province gets a boom, our governments waste it on political gain, kicking problems down the road for future Albertans. Perhaps, for once, Albertans will use this boom to realize the future is far more jeopardized if we don’t solve any problems of today.

If most of the profit leaves, if fewer people are employed and if we don’t even spend any new revenue on ourselves, who actually benefits from this miracle balanced budget?

Aside from Jason Kenney and foreign-owned oil companies, not many. And in five weeks one of those might not even work here anymore.