NATIONAL

WESTERN UNION

NICHOLAS KÖHLER July 21 2008
NATIONAL

WESTERN UNION

NICHOLAS KÖHLER July 21 2008

WESTERN UNION

Suddenly Alberta and Saskatchewan have a lot of fears in common

NATIONAL

NICHOLAS KÖHLER

Back in April, Saskatchewan Premier Brad Wall flew Peter Lougheed, the original blue-eyed sheik and former premier of Alberta, into Regina on the provincial dime. “He came out here for the price of a steak sandwich and an airfare,” Wall says. “There was no consultant’s fee, although Lord knows he could command a big one.” One Regina paper described Wall’s comportment at thetête-à-tête as one of “fawning delight.” Certainly Wall, whose province has lately emerged from a long night of economic torpor, has much to learn from Lougheed, who steered Alberta through an earlier energy heyday. But Lougheed has more to teach than mere boom-management. And Wall, quickly emerging as the West’s most articulate champion, could soon be forced to channel 1980s-vintage Lougheed in a showdown with Ottawa.

Not since the days of the National Energy Program have the Prairies been under such pressure. Then, Ottawa sought to soften the impact of a worldwide energy crisis with artificially low domestic oil prices, bleeding Alberta of investment. In response, Lougheed went so far as to threaten to cut Alberta’s supply of oil and gas to eastern Canada.

Though it soon ended, the NEP became shorthand for Western dissatisfaction with the feds, a bogeyman still alive and stirring beneath the beds of Calgary oil execs and Edmonton political types.

The situation is just as fraught now as then, though the players have multiplied and inhabit a swampier, more treacherous field of battle. Alberta remains a target due both to its lax environmental policies and massive resource revenues. Forecasts for Alberta’s surplus, thanks to rocketing oil prices, peg it at some $12 billion, greater than both the federal surplus and all the provincial surpluses combined. At the same time, a new Western juggernaut has emerged. Regina’s finances are fattening on oil, Crown land sales have broken records, the price of potash is soaring and agriculture is reaping the benefits of a food crunch. Only recently free of its have-not status, Saskatchewan has joined Alberta to form a resource-rich Prairie Bloc. Wall, the youthful, charismatic Saskatchewan Party leader, has said his biggest problem is figuring out what to do with all the money.

Stéphane Dion may have a couple of ideas about where to send that cash flow. Many in the West see NEP-brand peril rising again in the form of the Liberal leader’s Green Shift, a levy that would ultimately price emissions from fossil fuels at $40 a tonne—offset by personal and corporate tax cuts—and which

Dion projects would raise over $15 billion in tax revenue. The plan is pilloried in the West as a way to “kneecap the part of Canada’s economy that’s working really well right now,” as Wall puts it. Wall projects that $7 billion of Dion’s projected revenue would come from Saskatchewan and Alberta. “Clearly, it’s a wealth transfer from Alberta and Saskatchewan to Central Canada, and I think it is devised so purposely with the political map in mind for the Liberal party,” says Wall, who argues Dion has given up on winning seats in the Prairies. And Wall adds he’ll fight “any initiative that will threaten our province’s have status, which we have waited and worked a long time for.”

Yet he and Alberta Premier Ed Stelmach have more immediate worries than the musings of a mere Opposition leader. A resolution adopted last month at the U.S. Conference of Mayors annual meeting calls for new standards that would curb consumption in the U.S. of oil sands crude as “dirty oil”—carbon-intensive fossil fuel that contributes more to global climate change. “Tar sands oil emits up to three times the greenhouse gases in the production process per barrel as conventional oil production,” said Mayor Kitty Piercy, of Eugene, Ore., who brought forth the resolution. “We don’t want to spend taxpayer dollars on fuels that make global warming worse.”

And the situation in the U.S. could get even more dire. Last year, President George W. Bush signed a law banning the use of dirty fuels by federal agencies, including the military. The debate over whether oil sands crude constitutes bad oil rages on. But in June, after Democratic presidential hopeful

Barack Obama pledged to reduce U.S. appetite for “dirty, dwindling, and dangerously expensive” oil, one ofhis senior advisers, Jason Grumet, wondered aloud about whether the oil sands should be subject to sanction. “If it turns out that the only way to produce those resources would be at a significant penalty to climate change, then we don’t believe that those resources are going to be part of the long-term,” he told reporters.

Better get the Prairie message out quick, then, before a possibly protectionist Democratic administration takes over in Washington. Up until recently, though, such messaging has been slow going. In April, after 500 ducks descended upon an oil sand tailings

pond north of Fort McMurray, Alta., only to sink into the sludge and die en masse, Stelmach struggled to contain a story that soon travelled worldwide. Calling the mishap an “opportunity to tell not only our American trading partner but all the world that we mean business when it comes to the rules and regulations we have in place with respect to protection of environment,” the premier went on to complain that the $25 million earmarked by his government to combat Alberta’s negative environmental image in Canada and abroad likely wouldn’t match the war chests of environmental groups. “In terms of David and Goliath, I’ve been in this position before,” he said.

Stelmach, in partnership with Wall, has had more success persuading U.S. decisionmakers of Western Canada’s merits as an oil

supplier. Indeed, Stelmach stresses the fragility of American interest in green oil. “We’re 13 per cent of the supply to the United States,” he says. “Take that 13 per cent out... what will oil be then? Two hundred dollars a barrel?” According to a Canada-U.S. survey by Fleishman-Hilliard, 75 per cent of Canadians and 68 per cent of Americans say new oil sands development are “a good thing,” with 55 per cent of those in the U.S. citing securof their

THE CARBON TAX WILL ‘KNEECAP THE PART OF CANADA’S ECONOMY THAT’S WORKING/ WALL SAYS

Arguments promoting Alberta as a cheap, secure source of oil appear to have won over participants in the recent Western Governors’ Association meeting in Jackson Hole, Wyo., where both Stelmach and Wall pushed Western oil interests. “When you look affordability and when you look at energy independence and when you look at emissions, all three of those need to be evaluated concurrently,” Utah Gov. John Huntsman Jr.,

a Republican, said. “We can’t let one get in front of the other.” A pair of Democratic congressmen made similar statements recently after visiting an Alberta oil sands operation and seeing carbon capture technology in Saskatchewan, a trip paid for with federal money. ;‘These are resources that can help immediately,” said Congressmen Tim Mahoney, of Florida. “Canadahas the ability, because they have the infrastructure in place, to immediately expand production.”

For Mahoney and the governors in Wyoming, even as they outline their environmental concerns, the oil sands may be irresistible. For Dion, eager to strike out against the Harper Conservatives, skim votes from the NDP and the Greens, and draw support from greenconscious Quebec, the oil sands are a potential bonanza, worth the risk of demonizing the West. “It’s very important for the world to know how much Albertans care about the environment, how much you are green and you want to do the right thing,” Dion told a Stampede crowd in Calgary. “I cannot accept that your reputation is damaged as it is now.” Still, according to recent polling, his carbon plan hasn’t exactly caught fire with the public. This week, Ipsos-Reid numbers said two-thirds of Canadians hadn’t even heard of the plan, while 60 per cent of those who had called it a “bad idea.”

Numbers like that please

Wall and Stelmach. But the storm clouds gathered on the Prairie horizon could just as easily thwart Western aspirations as drift from view. Wall says Lougheed, on his trip to Regina in April, counselled vigilance. “We talked about the importance of being proactive,” he says. “Because I think if anyone would have seen the NEP coming, as it finally came, there would have been a lot more noise ahead of it.” M

ENVIRONMENTAL concerns and Dion’s carbon tax proposal have put more pressure on oil sands development