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Wednesday, April 25, 2018

The most honest and insightful view of what is happening in oil and politics today

Kevin Taft on what turned Rachel Notley from crusading critic to big oil crusader

I spent four years in the Alberta legislature with Rachel Notley, from 2008 to 2012. I liked and admired her and was delighted when she became premier in 2015. Today when I watch her on pipeline and oil issues I ask myself, what happened to the Rachel Notley I knew? And I wonder if the same thing will happen to John Horgan.
Before they formed government, Rachel Notley and the Alberta NDP were effective critics of the oil industry who called for higher royalties, solutions to global warming, and upgrading more bitumen in Alberta. In the political blink of an eye they became crusading champions for Texas-based corporation Kinder Morgan, which wants to expand its Trans Mountain pipeline to carry raw bitumen from Alberta to the port of Vancouver, to be shipped for processing abroad. The companies that extract Alberta’s bitumen are mostly foreign owned and pay as little as 1 per cent in royalties and some of the lowest corporate taxes in the country, and they have tens of billions of dollars in unfunded environmental liabilities at risk to taxpayers.
So how to explain Notley’s reversal? Let’s start by dispensing with some myths being spread by her, the media, and industry.#cdnpoli #ableg
So how to explain Notley’s reversal? Let’s start by dispensing with some myths being spread by her, the media, and industry.
First, this is not about getting more royalties. Royalties are the price industry pays to buy the raw bitumen from its owner, the Alberta government. Alberta’s royalty rates were chopped to fire sale levels in 1997 by the Klein government and Notley has left them there. In 2016, for example, Syncrude had gross revenues of $3.4 billion and paid a mere $37 million in royalties, just over one percent. The past two years the Alberta government earned more from liquor sales and gambling than from selling almost three million barrels of bitumen a day to big oil companies. It is a silent scandal Alberta’s NDP refuse to address.
Second, building or blocking this pipeline is neither an economic bonanza nor an economic disaster for Alberta or Canada. Trans Mountain will reduce transportation costs for oil companies and open new markets for bitumen, but its capacity only covers about twelve percent of Canada’s total oil production, and alternate pipeline projects are underway.
Third, this is not about creating long-term jobs, because pipelines take only a few people to operate and the oil industry is replacing people with technology everywhere it can. Neither is it about economic development: shipping raw material for processing in other countries is the model for colonies, not for fully developed economies.
So why is Rachel Notley throwing the country into political crisis?
The easy answer is that it improves her chances in next year’s election, but that glosses over this much deeper reality: Rachel Notley may be in office but the oil industry is in power. Wherever its interests are concerned the oil industry runs Alberta. To a lesser but significant degree the same thing applies in Ottawa.
Here is what I mean. Governments are made of many parts and in a healthy democracy these parts counterbalance one another. Opposition parties counterbalance governing parties; the courts counterbalance legislatures; regulators counterbalance industries, and so on.
Not so in Alberta, at least not when the interests of the oil industry are at stake.For decades the industry has spent millions of dollars targeting political parties on both sides of the legislature; civil servants; universities; think tanks; regulators; non-profit groups; the media; and more. The industry has formed a state within the state that I call “oil’s deep state.”

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