Fueling a Strained Unity: Post-Trudeau Oil and Gas Politics in Alberta
Having lived in Alberta for most of my life, I have been fascinated by the unique, yet often subtle ways that the energy industry permeates every aspect of the province. It is irrefutable that Alberta is economically, politically, and to varying degrees culturally defined by the energy commodity complex. Alberta’s oil sands have the fourth largest proven reserves in the world, behind only Venezuela, Saudi Arabia, and Iran. Alberta’s extraction of this massive endowment of natural resources helps to explain why it routinely has the highest provincial GDP/capita in Canada. According to the provincial government, the upstream energy sector employed 138,000 people in 2022 whilst attracting $24.6 billion dollars of investment alone.
Aside from pure economic value, it is hard to omit the cultural function of the oil and gas industry in cities like Edmonton and Calgary. It inspired Edmonton’s iconic hockey team, where spectators around the world watched Gretzky raise the Stanley Cup with Alberta oil displayed proudly on his chest. While anecdotal, trust me on this: if you drive 30 minutes in Calgary, you will see an “I love Canadian Oil and Gas” sticker on someone’s car. More globally, as Trump continues to flex his foreign policy arm by proposing Canadian statehood, social media is filled with posts suggesting that Alberta would be Texas 2.0, a new Republican stronghold, while nearly all the other provinces would be more akin to California or New York. Is Alberta really that different from broader national consciousness?
The political role of oil and gas in Alberta has, predictably, created friction between the province and the Trudeau government, an administration that won elections in part to their promise to fight the existential climate threat. While Canada federally promoted a pro-climate agenda, Alberta was conducting “the fifth largest oil-producing” operation in the world. Unsurprisingly, political tensions between the Alberta government and the federal government have reached historic highs under the Trudeau government, with many Albertans questioning the government's capacity to deliver effective policy that meets the province’s unique demands.
Although Trudeau resigned, the choices made by his government still remain. While tradeoffs in society are common, the most predominant one by a significant margin in Canada is the tradeoff between capitalizing on the vast non-renewable resources lying deep under Alberta and enacting meaningful climate action at a national level. No matter your political stance on climate change, picking a side is seemingly impossible. After all, Alberta contributes the most to the equalization payment system, allowing provinces like Quebec and Nova Scotia who exceed their fiscal capacity to invest in much needed services. Cutting the industry that most contributes to this system, and Canadian macroeconomic targets at large, is not just an Alberta problem – it is a Canadian problem.
Knowing this, the focus of this article will not be offering advice to assess this tradeoff from an environmental perspective, since the complexities of such a problem are best left answered by the experts. Instead, the focus will be on exploring the nuanced economic and political sentiment that has emerged in Alberta following Justin Trudeau’s reign as prime minister. By understanding the current perspective of the province's biggest industry, the rest of Canada can better understand Alberta, and vice versa, even if their interests appear polarizing.
Alberta’s oil and gas industry felt considerable pressure to decelerate production under the Trudeau government. In 2020, an already tumultuous year, “headwinds” from policymakers included declining investment, lower capital spending, the cancellation of Keystone XL, the associated cost increases following carbon pricing, and regulatory uncertainty over the government’s desire to pursue green energy. The cancellation of pipelines in particular is a massive concern for the industry as Canada is set to face a second Trump term. To assess what Albertan industry experts are forecasting, I spoke with Mr. Daniel Labelle, Sr. Vice President of Exploration at Hammerhead Resources, a Calgary-based energy company. In our interview, he reflected on the consequences of 10 years of these policies and how they may affect the future:
“We’ve (Canada) created our own mess. So now, all those decisions that blocked these pipelines have come back to kick us in the nuts. We are now in a position of weakness, and time will tell how these Trump negotiations will go.”
Mr. Labelle stressed an important point: Alberta feels like the nation has given up on them. This is perhaps best evident in Alberta premier Danielle Smith’s recent trip to Mar-a-Lago to negotiate with Trump on Alberta’s, not Canada’s, behalf. While she faced significant criticism for abandoning the “Team Canada” approach, Mr. Labelle argued that no such team exists right now.
“Where was Team Canada over the last decade when all the government was trying to do was crush all boots in the industry? Team Canada shouldn’t be something that only rises when there is a crisis. Team Canada should happen all the time.”
“Team Canada,” and Alberta’s role on said team, is not just a matter of pursuing mutual business ventures. Through rhetoric, the federal government has influenced the feelings and emotions that resonate with ordinary Albertans. In order to understand how these individuals feel, I asked Mr. Labelle if Albertans are frustrated exclusively with Trudeau’s Liberals, or if there is something deeper involved. While the answer mostly blamed the Trudeau government, a surprising emphasis was placed on the seemingly outsized political influence other provinces have in Ottawa, notably Quebec.
“When Ottawa faces a choice between what Alberta wants and what Quebec wants, Quebec will always win out. So there will always be some resentment towards that. Resentment actually sounds like a spoiled little kid, so it's more frustration since Alberta is saying, "hey Canadians, this is for you, this is for the good of the country, this is for equalization payments, this is for-” and no one is listening.”
There is a lot to unpack from Labelle’s message. While Quebec and Alberta have been at odds before, especially over construction of the proposed Energy East pipeline, it appears that post-Trudeau Alberta feels as though Quebec’s interests won at the expense of Alberta’s. In many ways, this observation made by Mr. Labelle aligns perfectly with the current political strategy of Danielle Smith. She admitted that her government’s federal strategy was inspired by Quebec’s ability to deal with the federal government, so unlike pre-Trudeau times, Alberta is now asking “What would Quebec do?” Interestingly, after 10 years of Trudeau, Alberta has adopted a Quebec-style pursuit of autonomy due in part to the need to overcome the alienation of its energy industry.
Alberta offers a very simple, yet equally difficult, proposition to Canadians: a strong, productive energy industry that, with adequate investment, can stand up to Trump’s policies, fund other provinces, and help produce the goods that Canadians want and need. Alberta has emerged from Trudeau feeling wronged by other provinces, and as it stands, Danielle Smith is looking outward to our increasingly hostile neighbor for refuge as opposed to looking inward. At the very least, this speaks volumes to the alienation that Alberta experienced during the last decade.
Crucially, however, hope remains and the desperation demonstrated by the premier do not fully encapsulate the sentiment I received from my conversations with Albertan industry experts. My impression is that while time is running out for Canada to include the province in a nation-wide economic effort, optimism and nationalism still remain in the heart of the Alberta energy industry. The industry does not relish in being so different; an eagerness to integrate better with the country and also reimagine what Team Canada might look like is the dominant feeling.
However, lingering optimism will not last forever. Ultimately, the decision to reconcile with Alberta rests entirely with the government that will soon take shape in the next election. The new Canadian administration, therefore, will have to make a choice: rely on Alberta today, or somewhere else tomorrow. And while this choice is very complicated, it is one worth pondering. Whether or not you personally agree with Labelle’s take on the importance of Canadian energy in the short-run, the uncomfortable truth is that this election, irrespective of the victor, will have tremendous consequences on Canada’s ability to navigate an uncertain future. So, I’ll leave you with Mr. Labelle’s attempt at providing an electoral pitch on behalf of Alberta’s energy industry:
“I hate to be over-sensational about it, but it’s one of the most important elections we’ve had in our history. There’s a direct correlation to the price of oil and the Canadian dollar. It always seems that energy is so myopically focused on Alberta, but it's not. Canada is hugely dependent on this industry.”