Are Albertans Held Captive By The Oil Industry?

Here’s a link to an interesting article in The Tyee where Mitchell Anderson proposes that when it comes to the oil industry, Albertans suffer from Stockholm Syndrome. That’s a term that was coined in the 1970s to describe a psychological condition where a person who is held hostage, through the stress of the ordeal, actually begins to develop sympathetic feelings for their captor.

Had Alberta the type of royalty regime proposed by former PC premier Peter Lougheed back in the ’70s when the first energy crisis hit, Mitchell notes, it would now have a Heritage Fund in excess of $200 billion that could be used to fund all sorts of programs for the benefit of Albertans. Instead, successive PC governments have ratcheted down royalty rates to the great benefit of the oil industry, but to the general impoverishment of the province.

True, in today’s political climate Lougheed, who in my mind ranks as the best premier Alberta’s ever had, would be labelled a radical pinko leftist commie bastard or some other inflammatory slur. But instead of running perennial deficits Alberta’s public finances would be in much better shape.

In contrast to Alberta, Mitchell observes, Norway set a reasonable royalty rate for its off-shore oil resources, and now has a $570 billion fund to use for the benefit of Norweigans today and for generations to come. Mitchell also notes Newfoundland was initially bullied by the oil industry when its off-shore resources were being developed, but that former premier Danny Williams held firm and was able to secure a much more favourable royalty deal that includes an equity stake in the Hebron oil field.

That’s the magic of natural resources, I guess. Under free trade agreements, corporations engaged in activities like manufacturing and r & d do have some leverage to demand concessions or they can pack up and move elsewhere. If they want to access a natural resource in a stable political climate with a reliable infrastructure network and dependable labour force, though, they don’t have the same clout. Of course, if you infect the government with active lobbyist for your industry, you can still get your way. That’s why following Monday’s election, Alberta might slip further into captivity as 13 of the Wildrose Party’s 87 candidates, according to Mitchell, have direct ties to the oil and gas industry.

Saskatchewan is arguably suffering the same fate as Alberta. When the Sask. Party first started out, it was essentially bankrolled by the Calgary oil-patch. And five years into its reign, it adamantly refuses to entertain any discussion of bumping royalty rates on non-renewable resources to ensure the province’s long-term prosperty.

In the area of potash, with several existing mines being expanded, and new mines being built, the prospect exists of the potash market very shortly being flooded. My understanding of the royalty regime is that when prices are high, as they were in 2008 (around $800 a ton), the province reaps a royalty windfall. When prices are low, the amount the province receives drops dramatically. Full-on production at bargain basement prices probably suits international mining companies fine. I hesitate to say, though, that it’s in the best interests of current and future generations of Saskatchewan citizens.

Author: Gregory Beatty

Greg Beatty is a crime-fighting shapeshifter who hatched from a mutagenic egg many decades ago. He likes sunny days, puppies and antique shoes. His favourite colour is not visible to your puny human eyes. He refuses to write a bio for this website and if that means Whitworth writes one for him, so be it.