One thing Albertans have traditionally looked upon with great suspicion is when a federal government, in particular a Liberal one, says: “We are here to help the energy industry.” And yet that could be the case if, as reported, the feds are planning a $15 billion infusion into the struggling energy sector.
Friends, we are in unprecedented times, and Premier Kenney was not being hyperbolic when he stated that Alberta is going through something similar to the Great Depression.
Since 2014, Canada's oil and gas sector has struggled -- and just when it seemed things couldn’t get any worse, it gets hit over the head with two sledgehammers: the coronavirus and an all-out price war between Saudi Arabia and Russia. The purpose of the war is to bankrupt higher-cost oil producing jurisdictions like Alberta, and I fear it might be successful.
And you can take it from me, the last thing that the federal Liberals want to do at this juncture, with their tenuous hold on power with a minority government, is invest $15 billion in the oil and gas sector.
The reason? Politically it is suicide.
Having talked to many Liberal MPs following the last election, they've all told me to a person that they got beaten up by progressive voters for purchasing the TMX pipeline. The result would be the same with this investment.
So the question is, why would the government bother?
It sure isn’t about getting more votes in Alberta. But it is in the national interest. Just like the purchase of the TMX pipeline.
The oil and gas industry is still a huge part of the provincial and the national economy. Without an injection of capital from the federal government, things will get worse -- a lot worse
To be clear, Alberta is on the brink of economic collapse. With the province’s finances a disaster, the Alberta government’s debt rating racing towards junk bond status, and the strong fiscal position of the federal chequebook, it is incumbent on the senior level of government to act.
Like the premier, I am not using hyperbole in saying that without federal intervention, this collapse may be permanent. If oil and gas companies suddenly go bankrupt, people lose their jobs, they can’t pay mortgages, and they leave. Small businesses go belly-up. It’s a vicious cycle.
If you are thinking that it's not possible, think again. With Western Canada Select selling for $7 a barrel in recent days, how long can companies remain in business? One only needs to look at share prices of energy companies to see what the market thinks about that proposition.
Without appropriate government intervention, Alberta will not be able to transition to a low carbon economy, because there will be no economy.
One of the purposes of government is to act in times of uncertainty and peril. Act by supporting people and, yes, intervening in this economic crisis brought about by the coronavirus and by Moscow and Riyadh engaging in a price war. Both of these situations will ultimately pass, but we need to take measures now to ensure there's still a viable economy in Alberta when they do.
The federal government's help is warranted, needed, and necessary. And it needs to happen today.
