After protesting against the oil industry for 10, 20, 30, and even 40 years, Alberta’s NDP took the helm of the province in 2015 after a remarkable sum of events leading up to that fateful day. Since day one of their governorship, Alberta’s oil and gas industry has suffered deeply–it will likely go down as the worst 4 years in the sector’s history.
Capital fled and did not return
The day after the 2015 election, massive amounts of capital began fleeing the province. During a 2 day period when oil prices increased (May 5 & 6 2015), the TSX Energy index dropped over 4%. Small cap energy producers were hit hard, and over $20 billion was wiped from the Canadian energy markets on day one and two.
Reports from banks and analysts hit the streets, the consensus from the investment world was conclusive: the NDP’s election victory would have a negative impact on this market. Alberta became a jurisdiction looked upon unfavourably by portfolio and fund managers.
Over the next 4 years, investment fell year after year. Compared to 2015 when $75 billion was invested in Alberta, 2016, 17 and 18 saw only $60 billion in capital spending. If spending had held from 2015, Alberta would have had an additional $45 billion of capital in this province.
Alberta’s government fought against pipelines
Prior to forming government, you would be extremely hard pressed to find a whisper of support for a pipeline project from any member of Alberta’s NDP. Immediately upon taking office, the party began its advocacy against pipeline projects. Premier Notley stood up in the legislature during their first sitting and claimed the government’s opposition to Keystone XL. A pipeline which (if built) would have saved Alberta tens of thousands of jobs.
After the election of Justin Trudeau, Notley (and her crew) supported his cancellation of the desperately needed Northern Gateway pipeline. That particular project was in the crosshairs of the NDP as they had members who traveled to Kitimat to oppose its construction.
Lastly, the Energy East project which had the potential to be a true nation builder, was killed by the Trudeau government. The public heard not even a peep from Alberta’s NDP. Their silence was deafening.
Costs and regulations increased
Coupled with their active fight against pipeline construction, Premier Notley and the NDP began instituting a series of costs and regulations which crippled the industry’s hope of a recovery. Needless to say, the carbon tax did nothing to ease the burden on oil and gas producers. In fact, their announcement of a climate and royalty review caused several oil and gas producers to put plans and spending on hold and ultimately reduce overall activity.
The NDP also introduced higher corporate taxes, higher payroll taxes, increased labour costs, more stringent regulations via the AER, and appointed several anti-industry spokesmen to positions they have absolutely no business holding. All in the name of ‘improving Alberta’s environmental record’ — which was not an issue to begin with. They put all of this on Alberta during the worst oil market downturn in decades.
Activity levels decimated
Activity levels in Alberta have been severely depressed during the NDP’s reign. Rig counts have stayed incredibly low and have not improved. With no capital, increased costs and regulations, this was an inevitability.
And unfortunately, coupled with the decimation of activity, came massive unemployment, record numbers on employment insurance, huge office vacancy rates, higher suicide rates and all other terrible things which accompany a bad economy combined with anti-business and industry policies.
It’s been an extremely dark 4 years in the province. The only takeaway will hopefully be a reminder of how bad things can get, and the damage a government can inflict on business and its chief industry.