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This Week in AB
Technology is hard
It’s difficult to continue to be optimistic when it comes to certain hurdles but I’m a hopeful sort who is buoyed by even a brief moment of positivity.
That, and my capacity for charitability knows few bounds.
When the NDP was elected in 2015, and kept their promise to review the royalty rates in Alberta, they discovered that — all things considered — the rates were fair.
This review had conservatives apoplectic about the damage that would be done to oil and gas investment, much like they claimed would be the case in 2007 under Stelmach. The Venn Diagram for anti-NDP and conservatives who wrung their hands over it then and oil and gas owners/contractors/labourers is probably just one circle.
Today, the Venn Diagram for progressives and conservatives wringing their hands over the moratorium on new green energy project approvals is likely also just one circle.
“Regulatory certainty”, Smith claimed at the recent conference of the Canadian Renewable Energy Association, was the overall purpose of the pause but it’s quite similar to the NDP’s review of royalty rates: the people who elected them expected them to keep their promise.
In Smith’s case, sure, there’s a bunch of tinfoil hat-wearing numpties warding off nanotechnology and 5G with essential oils, but there’s also a number of conservatives who take the conservation part of that ideology very seriously.
Municipalities and landowners in rural Alberta have been royally screwed over by oil and gas. From the landowners who couldn’t collect lease payments to those who are still waiting for clean-up, to municipalities who stopped receiving taxes, the government’s loyalties should be crystal clear by now.
Granted, we already have regulations about all of that but there has never been any political will within Alberta’s governing parties — any of them — for actual enforcement.
So, it’s difficult to lambast rural Alberta for demanding some attention to these details being that they’ve been hung out to dry in the past, and the present, by their government favouring industry over them — can they really believe it will be any different in the future?
<Insert regular reminder that the Alberta Advantage serves corporate, not public, interests here>
That hostility isn’t as “woke” as you think it is
Pension funds, investment funds, and big banks have all begun eyeing oil and gas with a lot more cynicism lately not because people “woke up” and started believing climate science that has been around for decades and decades — it’s about the money.
Perhaps I need to fill that in a tad.
It’s been estimated that oil and gas companies will take the money and run, leaving nothing but unmet remediation obligations and billions in environmental liabilities in its wake.
While true everywhere, there’s been a lot of focus on Alberta specifically because we’ll be asking the rest of Canada to help pay for it.
It’s the only time Alberta willingly extends its advantage to the rest of the country.
Last week, I wrote about efforts by the UCP, on behalf of oil and gas, to get more money from the feds to build more facilities to help mitigate emissions from current production.
In 2020, the federal government gave $1.7 billion to Alberta for oil well remediation. And to create jobs since the oil industry isn’t going to do that anymore.
Instead of giving that money to the Orphan Well Association, then-Premier Jason Kenney gave it to oil companies. Probably because he wanted to be able to say “look! They are creating jobs! Tax cuts work!”
Unfortunately, a 2021 study by the Parkland Institute suggested the influx of cash didn’t appear to increase the number of remediation projects. Study author Megan Egler told the Canadian Press that while data was limited, it was "highly, highly suggestive that this funding simply was just replacing the money that would have otherwise been spent (on remediation) by these oil and gas producers."
You don’t say?
The Orphan Well Levy — an annual industry tax that creates a remediation fund to cover reclamation when companies go bankrupt and abandon their liabilities to the province — collected $60 million in 2019; an amount that reports have said will come nowhere near the cost of cleaning up abandoned wells in the province. Of note, in 2017 there were around 80,000 inactive wells, more than doubled to 170,000 by 2019, but has since declined to a more moderate 122,456.
Something else happened over Kenney’s brief tenure that seemed like a boon at the time — the royalty payday finally hit.
Premier Peter Lougheed knew that the costs of developing Alberta’s oil and gas sector were going to be immense. Many of the projects took years to come to production and those were years when it was all money going in with nothing coming out. Investment was incentivized with low royalty rates while companies were paying off that capital investment.
Decades passed and oil companies kept their royalty rates low by continuing to invest in new projects — a little loophole Lougheed hadn’t closed.
However, in 2014 — during the perfect storm of investors pulling out over volatile returns and climate-minded policy development, and another projected downturn that economists said would be much different than in the past — oil companies shelved new projects.
In the fall of 2015 when many of the current projects were completed and moved into production, oil companies decided to continue to withhold new investment to shore up their bottom lines — which meant that a number of massive projects were officially “complete”. Over the next few years, capital investment was — for the first time since the 1970’s investment boom — paid in full, ushering in Alberta’s royalty payday and with it, new ways to get government support.
Which brings us full circle to Danielle Smith and her target on Albertans’ pensions.
I highly recommend watching the video of Smith posted by @disorderedyyc.
Smith isn’t the first Premier to champion Alberta oil, but she may be the first oil lobbyist to become Premier.
Pension funds have been divesting from oil and gas for a reason — money.
Now, she’s going to ask Albertans to decide if their pensions should be handed over to AIMCO (Alberta Investment Management Corp) — a management fund that has already taken hits on its oil and gas investment and whose losses appear to have been primarily suffered by pension funds.
Speaking of stellar investment aptitude…
As anyone who ordered something large since 2020 knows, there have been supply chain hiccups along the way, even with something as small as over-the-counter cold and flu medication during the respiratory virus festivals we’ve decided to just keep hosting every spring and fall rather than pop on a mask. But I digress.
After children’s acetaminophen was in such great demand across the continent that everyone was running out, Danielle Smith came to the rescue, promising to share her procured bounty with other provinces and territories.
Smith announced she had found a source in Turkey who could help our kids get through the respiratory virus season after they were already sick — because why would we want to prevent that from happening in the first place? Sigh. Digress.
The cost was only $75 million; a small price to pay for being able to prove to Albertans that we don’t need the feds getting into our business.
Except the gotcha moment, much like most of the medication, never arrived.
By the time the first shipment was delivered late one winter evening in January of 2023, the makers of children’s cold and fever medications had already caught up to the demand.
To make matters worse, because the Turkish medication was weaker than what our regular brands offer, it was only available through the pharmacist so they could educate parents on the different dosages.
With familiar brands back on the shelves (for weeks by that point), sales of the off-brand, not available over-the-counter, weaker medication were disappointing. Giving it away wasn’t really an option because no one else needed it for the same reason Alberta didn’t.
With tails slightly between their legs, the UCP decided to keep the off-brand use for hospitals instead but, as noted above, with familiar brands back in stock, uptake was poor even there, and AHS directed hospitals to stop using it in July.
Now, as it turns out, Alberta didn’t even receive the full shipment it paid for in December, and since we only used around 9,000 of the ones we did get, that puts our costs at more than $8000 per bottle.
Excuse me while I bask for a moment in the glorious presence of fiscal responsibility.
(Note: the $8,000 was edited from $800 as I was using the UCP’s $7.5 million tellthefeds advertising boondoggle instead of the $75 million on this boondoggle. Hard to keep track.)