Over the past two weeks, both the Alberta and federal governments have released budgets. In Alberta the projections are for debt and deficits, with the degree of severity relying heavily on the price of oil. Federally, we see a projected deficit of $28.5 billion.
In Alberta, while we can’t predict with certainty what commodity prices will do, it’s curious that a government counting on a resurgence in the oil business wouldn’t hedge their bets by focusing on what they can control: in this case, attracting investment. If the province is hoping for more tax dollars from increased activity and more revenue from royalties, they need not leave it to the price of a barrel to get what they want.
Federally, rather than incentivizing a proven economic pillar of the Canadian economy to bring in revenues and attack the deficit, we see an increase in tariffs on oil and gas exploration and development combined with a confusing donation of $30 million to Alberta to offset “challenging economic circumstances arising from weak commodity prices affecting the oil and gas sector.”
With the prospects of increasing debt and deficits, and the oil and gas industry’s proven ability to generate jobs and revenue, clearly there must be a reason for such awkward policy and perhaps it’s the government opinion of industry itself. As we’ve heard time and time again from both Alberta and Ottawa, oil and gas is not the energy of the future. In Alberta, oil and gas is a necessary evil that must be put up with until we find a better way. In Ottawa, they suggest investing in an industry so destructive to the environment is not money well spent. They suggest Canadians must demonstrate an understanding of how destructive these products are by placing a price on carbon and purchasing carbon offset credits. They use taxpayer money to buy light bulbs and low-flow shower heads for citizens, and subsidize renewable energy programs that drive up energy costs.
But what if there were another way to look at things? What if, instead of a bad news story, the Canadian oil and gas industry was actually viewed as a good news story? What if we were the best in the world at producing oil and gas? What if our industry upheld human rights, labour standards, health and safety standards, environmental standards? What if the profits from oil and gas extraction went to health care, education, good jobs, RRSPs, and pension plans? What if the products we produce made the standard of living around the world better (think mobile phones, air travel, affordable heat, modern medicine)?
What if we innovated and constantly improved? What if advanced drilling technology could cut drilling time for an average horizontal well in half in only 10 years; emissions from a barrel of oilsands decreased by 30% since 1990; the Alberta oilsands had a voluntary price on carbon since 2007? What if all of these technologies and efficiencies reduced Canada’s already dramatically low contribution to global greenhouse gas emissions. What would the world look like if Canadian technology and processes were employed in every oil producing country?
Well the answer to all of these questions is simple: the true story of the Canadian oil and gas industry IS a GOOD NEWS story for all Canadians. For this reason, it’s extremely curious that provincial and federal leaders refuse to not only acknowledge it, but utilize it in whatever transition they have in mind for energy in Canada. Instead, they leave facts on the sidelines, and subject Canadians to economic hardships based on rhetoric and pressure from celebrities and radical environmentalists. Leaders tell the truth, and telling the truth about the Canadian oil and gas industry is an easy way for governments to put Canadians back to work, help our economy, put dollars back in their coffers AND tell a good news story about the environment. The benefits of our oil and gas industry far outweigh any negatives, yet, instead of getting the good news story, our leaders leave us confused.
Mark Scholz is President of the Canadian Association of Oilwell Drilling Contractors