It appears the worst may be over for the Alberta economy. However, this is a cautious prediction, based mainly on the fact oil prices seem to have stabilized lately. Notice that nobody seems to be predicting oil prices will rise dramatically in 2017. Perhaps what we have finally learned, based on a notoriously poor forecasting record over many years, is oil prices are extremely difficult to predict over longer periods of time. This is a market that has many diverse participants, both on the demand and supply side, so long-term prediction of the path of the world price of oil is a fool’s game. That all said, there is room for some cautious optimism that oil prices may creep back upward in 2017.
Some of the other good news for Alberta comes from the election of Donald Trump. Trump and the Republicans are clearly pro-pipeline, which may give new life to Keystone XL. Even in a depressed world oil market, this will give a boost to the Alberta economy. It is interesting the Republicans also appear to be against any form of carbon tax or cap-and-trade scheme. It will be interesting to see how carbon taxes in Canada evolve with our biggest trading partner not having any carbon taxes.
In Alberta, some of the bad news comes from the fact there are matters other than the world price of oil that should be cause for concern. The recent pipeline approvals in Canada are certainly good news, but this is not a done deal yet. The approvals seem to have galvanized the opposition to fossil fuels, and made it more radical, something I did not think was possible. This is part of a rising anti-fossil fuel sentiment in Canada, which has been going on for some time. My major concern is this anti-fossil fuel sentiment has become institutionalized.
We should worry about the mess that was created in Ontario, with the decision to go green very quickly. The result was skyrocketing electricity prices. Premier Wynne admitted recently Ontarians may have to choose between “paying the electricity bill and buying food or paying rent.” Basically this mess was created by the Green Energy Act. The worrisome part for us in Alberta is the architect of the Green Energy Act was Gerald Butts, who was a senior adviser to Dalton McGuinty. Mr. Butts is now principal secretary to Justin Trudeau.
Here is where we run into a great contradiction. The sluggish growth in the Canadian economy at the present time is due to the fact there is sluggish growth in the Alberta economy, due to depressed oil prices. What a lot of Canadians do not seem to want to admit is that Canada is an oil-producing nation, and the Canadian economy will improve when the world oil market improves. However, the principal secretary to the prime minister is stridently anti-fossil fuel. This does not bode well for the Alberta economy or the Canadian economy. Moving Canada quickly away from fossil fuel production, as was the case in Ontario, will do great harm to both the Alberta economy and the Canadian economy.
Frank Atkins is a senior fellow at the Frontier Centre for Public Policy.