A reality based independent journal of observation & analysis, serving the Flathead Valley & Montana since 2006. © James Conner.

9 May 2015

Alberta election sends shudders through the Oil Patch

Alberta’s voters spoke four days ago. After 44 years in power, the Progressive Conservatives are out, the New Democrats are in, the new opposition is the Wildrose Party — and the outcome, while real, may be a fluke that won’t be repeated in the next election.

Alberta, which has three major and several minor political parties (complete list of parties on the ballot), determines winners on a first past the post basis; the candidate with the most votes wins. It’s the same voting system we use in Montana and it works reasonably well in a predominately two-party system.

In a multi-party system, however, a party without majority political support can, in a first past the post election, capture a majority of the legislative seats. That’s what happened in Alberta.

Although the New Democratic Party captured at least 53 of the 87 seats (“ridings” in the local argot), it did so with only 40.6 percent of the provincial vote. The NDP received majorities in 21 districts, and pluralities in 32 districts (download Excel spreadsheet).

The two conservative parties, the Wildrose and the Progressive Conservatives (which had formed a 70-seat parliamentary coalition last year), together received 52 percent of the vote over all, and combined, a majority in 52 districts.

In one district, the NDP and Wildrose candidates tied, so the final make up of the legislative assembly is not final.

alberta_breakdown

There is, I think, a strong likelihood that the PC will be subsumed by the Wildrose Party within a year or two, or that the two parties will merge into a new conservative party.

Shudders and apprehension in the Oil Patch

Long lasting or not, the NDP’s win sent shudders through both the province and Canada. It was as though Texas had flipped to Democratic rule by a landslide, with the Libertarians replacing the Republicans as the second largest caucus in the legislature.

The comparison is apt. Alberta is the Texas of Canada, almost the same size in area, although not in population, and by far Canada’s largest oil producer. Texas produces 97 million barrels of oil a month, Alberta 71 million. And until the 5 May 2015 election, both Alberta and Texas were governed by oil friendly conservatives.

Now Alberta’s Oil Patch wonders, figuratively speaking (for the most part), whether it will be governed by the Sierra Club:

Election pledges to raise corporate taxes, review royalties collected on petroleum production and withdraw support for oil pipelines to B.C. and into the U.S., were criticized during the election for their effect when enacted but also the uncertainty they would create in the interim.

On the morning after the election, energy stock prices dropped as financial investors released reports warning the new government was far more likely than the previous Tory regime to enact regulatory changes that would hurt the industry.

What happened? According to an excellent analysis in the Edmonton Journal (be sure to read it), 44 years of mistakes finally outweighed 44 years of successes, but the fatal stumbles began as the Great Recession commenced:

“This was not about 2015,” Mount Royal University political scientist Duane Bratt said.

“This was about the last 10 years of Alberta politics all catching up to them.”

The stunning collapse can be traced to 2007, when then-Premier Ed Stelmach called a controversial royalty review into the energy sector. The expert panel concluded Albertans weren’t getting their “fair share” from energy development and recommended an increase in royalty rates.

Alberta’s oilpatch was outraged. Stelmach ignored the concerns and hiked rates in January 2009, the peak of the global recession.

Angry oil companies poured money into the upstart Wildrose. Donations skyrocketed from $230,000 in 2009 to $2.7 million in 2011. The party elected Danielle Smith as leader: A smart, telegenic libertarian with a storied work ethic and a sharp tongue. By late 2010, she had the Wildrose leading the Tories in rural Alberta.

And there were scandals:

Prentice [last Premier of the defeated Tories] went on to unilaterally overturn a funding decision by an independent legislative committee and cut the budget for investigating deaths of children in care.

A Calgary Herald investigation revealed the Tories inked a secret, multimillion-dollar deal to fix a mountain golf course operated by party insiders.

Don’t expect to see immediate or radical changes on environmental issues. The rape of the Athabasca Tar Sands will continue, although more environmental safeguards may be imposed. Will plans to pump tar sands oil to the gulf coast of Texas through the Keystone XL pipeline be abandoned? Probably not, but more value added processing of oil in Alberta could change the number, size, and destinations of future pipelines (and pollute more air in Alberta).

If conservatives and their benefactors in the Oil Patch become convinced that a merger of the PC and Wildrose parties into a new conservative party can retake the legislative assembly at the next election, look for Alberta’s right to engage in massive stalling instead of making a good faith effort at cooperation.