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High-stakes clash looms Former Alberta premier’s chilling prediction; test of wills could undermine key U.S. source Gary Park For Petroleum News
He doesn’t always spread a welcome message these days among Canada’s oil patch leaders, but ignoring him is not an option.
Peter Lougheed led the beginnings of an Alberta political dynasty as the province’s premier from 1971 to 1985, laying the foundations for the Conservative party to continue its rule to this day.
In the process he set in motion the development of Alberta’s oil sands by overcoming the skeptics who dismissed the resource as an over-rated, over-priced mining venture.
But, from the time he left office until a year ago, Lougheed kept his political thoughts to himself.
That changed with a helicopter ride over the oil sands of northeastern Alberta in summer 2006.
“When you actually see the magnitude (of the development) by helicopter, it just gets you,” he said. “I am appalled by what is happening there.”
By far the most trusted and respected voice in Alberta, the 79-year-old elder statesman has returned to the spotlight, initially calling for a slowdown in the pace of expansion until the industry and governments could develop policies to cap greenhouse gas emissions and ease the demands on water supplies from the Athabasca River.
In his latest foray in mid-August, Lougheed served notice that a “major constitutional battle” is shaping up between the Canadian and Alberta governments over the environmental harm caused by oil sands development.
“The issue is there front and center and coming to a head, in my view,” he told the Canadian Bar Association, representing all members of the legal profession.
He said the clash “will be 10 times greater” than any in the past, including those he was involved in the 1980s, including the ultimate showdown when the Canadian government enacted the National Energy Program in 1980 to promote oil self-sufficiency for Canada and promote Canadian ownership of the energy sector by pumping billions of dollars into exploration and development.
The legislation contained a revenue tax that amounted to double taxation of oil and natural gas — unlike anything that applied to other commodities — which the University of Calgary estimated sucked C$100 billion from the Alberta economy until it was scrapped in the mid-1980s.
But, by then, the damage had been done. U.S.-based companies staged an exodus from Canada and hundreds of skilled professionals quit the industry, leaving behind a trail of wreckage that took years to clear up.
Lougheed countered by freezing development of the oil sands and threatened to stop oil and gas shipments to the rest of Canada — an ultimatum that was shelved once the government of Prime Minister Pierre Trudeau backed down and allowed Canadian oil prices to rise to world levels.
“I think the issues we saw before — and I was involved in many of them — were important,” Lougheed said in August. “I don’t minimize them. But they aren’t even close to (the looming federal-provincial conflict) I have described.”
Canadian public vs. Alberta On one side is a Canadian public troubled by climate change and putting pressure on the Canadian government to introduce legislation to reduce greenhouse gas emissions.
On the other side is Alberta, which owns its natural resources and claims the right to decide how they will be developed.
In the middle are the oil sands, which hold the key to Canada’s oil self-sufficiency and its ability to meet the forecast export volumes, but are also fingered as the fastest-growing source of GHGs.
“It’s a very major matter that threatens Canadian unity,” Lougheed said.
His betting is that the dispute will end up before the Supreme Court of Canada, forcing the court to decide whether legislation giving the federal government the right to regulate GHGs overrides Alberta’s constitutional authority to determine how and when its natural resources are developed.
University of Toronto constitutional law expert Sujit Choudry argues the Canadian government has a “long-standing power to regulate environmental emissions and, in the event of a conflict between a validly enacted federal law and a validly enacted provincial law, the federal law prevails.”
The best hope of averting a destructive clash rests with a political compromise, with Alberta taking an even harder line than it has against GHGs.
But time is running out The Conservative government of Prime Minister Stephen Harper is expected to face an election either this year or next.
To have any hope of forming a majority government — a long shot at the best of times — it will have to win over voters in Ontario and Quebec, where the Kyoto Protocol has its strongest backing.
Targets require shutdown The three federal opposition parties have already pulled an end-run around Harper’s Conservatives by forcing through legislation demanding that Ottawa meet its Kyoto objectives by cutting GHGs to 6 percent below 1990 levels by 2012, while overhauling the government’s Clean Air Act to require Kyoto compliance.
There is no way Canada could meet those targets without shutting down the oil sands.
If nothing else Lougheed has forced all sides to decide whether to debate or litigate the issue.
And he has pressured his own province to choose between being “seen as the major villain in all of this in the eyes of the public across Canada,” or working on solutions rather than waiting for a Supreme Court ruling that could cause “major damage to the Alberta oil sands and our economy.”
Lougheed is not alone in raising concerns about the future of the oil sands.
Preston Manning, a former member of the federal opposition and a resolute defender of provincial rights, also told the Canadian Bar Association that the next political revolution in Alberta will occur when a party is able to harness the twin forces of conservatism and environmentalism.
When Canada becomes entangled in federal-provincial squabbles most Canadians tune out.
But the looming battle outlined by Lougheed is not one to be shrugged off as some esoteric constitutional matter — not for Canadian oil and gas leaders and not for Americans who might be inclined to take Canadian oil supplies for granted.
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