If you want to know why Alberta is so overly dependent on the US market for our oil and natural gas, we have no one to blame but us. We did it to ourselves.
Starting with Ralph Klein 25 years ago, and continuing with his successor, Ed Stelmach, Alberta has had a series of premiers who, politically speaking, made a career of casting bedroom eyes at our southern neighbours. In 2005 Klein gave a speech at Harvard University on “Alberta’s Role in the North American Energy Sector.”
In 2010 Stelmach spent $56,000 on a half-page ad in the Washington Post to tout Alberta’s oil exports to the US while countering environmentalists’ opposition to the oil sands. “Improved access via projects like the Keystone XL pipeline will benefit the US economically and allow your country to continue to receive oil from a country whose environmental and social goals are similar to yours,” said the missive (which the newspaper had rejected as an op-ed piece).
There was comparatively little talk then about more east–west pipelines. It was “ship, baby, ship”—southward.
Alberta’s unofficial mantra of the day was “Americans will always need Alberta oil.” Back then the Alberta government didn’t just do all it could to ship oil to the US; it shipped our heavy oil products to be upgraded by American companies.
Think of it as selling Canadian lumber to American manufacturers to be made into furniture.
Alberta is overly dependent on the US market for our oil and gas—and we have no one to blame but ourselves.
When Klein talked about Alberta’s “role,” he meant one where we supply low grade oil sands product to the US for refining. To spark an “oil rush” in Alberta’s oil sands, Klein introduced all kinds of incentives, including a tax break that was such a holiday for multinational oil companies he should have thrown in piña coladas and a cabana.
In his retirement years, former premier Peter Lougheed asked, in a 2006 interview with the magazine Policy Options, “What is the hurry? Why not build one [oil sands] plant at a time?” But Klein and Stelmach were in a hurry to exploit the oil sands and send the product south—and thus shackle us even more closely to the US.
We approved pipelines that were the energy equivalent of FedEx. Fast delivery guaranteed. The hewers of wood and drawers of water became the pumpers of heavy oil.
As early as 1993, premier Klein butted heads with prime minister Jean Chrétien, who was worried that the new North American Free Trade Agreement he’d reluctantly signed would force Canada to continue shipping oil and gas to the US at the expense of Canadians during an energy crisis. Klein had warned Chrétien to leave the deal alone, not only because Alberta wanted to ship as much oil south as possible, but because he didn’t want to scare off potential investors in the oil sands.
This, of course, was before fracking turned the US into the world’s largest producer of oil—and a less needy customer for Canadian energy.
Stelmach eventually realized that Alberta was in effect shipping jobs south along with our heavy oil, and that we needed to do more upgrading and refining in Alberta. That led to his government getting involved in a project that would see the first refinery built in Canada in more than 30 years. But the Sturgeon Refinery, just northeast of Edmonton, has become a disaster with a $10-billion price tag (it might start making money in 40 years). The project was a victim of cost overruns, low prices for heavy oil and a “North American energy sector” geared to American companies upgrading and refining Alberta’s raw products.
We simply could not compete in the very marketplace we had helped develop.
In recent years Alberta began focusing on east–west pipelines—and blamed the federal Liberal government for not getting new pipelines built. But even then Alberta’s gaze was fixed southward, with premier Jason Kenney in 2020 throwing away $1.3-billion in a failed attempt to kick-start the troubled Keystone XL pipeline project to the US.
Ironically, it was the federal Liberals who actually managed to get a new pipeline built: the Trans Mountain expansion through BC, which tripled the original line’s capacity to pump Alberta energy products to the west coast. But it ultimately cost taxpayers $34-billion, because private companies wouldn’t take the risk.
Alberta premier Danielle Smith has said she’d love to see more pipelines stretching across Canada so that Alberta can sell more oil and we won’t be so reliant on the US. These pro-Canadian sentiments are nice—but pipelines are expensive and controversial and take years to build. And when it comes to changing the status quo, Alberta is caught in a trap of its own making
Graham Thomson is a political analyst, member of the Legislature Press Gallery and former Edmonton Journal political columnist.
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Read more from the archive: “Petrostate” October 2010.
