photo by Jack Hope
The following news could drive you crazy, either with joy or frustration: The chances that the Keystone XL pipeline will ever get built just dropped dramatically.
The Obama administration’s slow-motion death march is only a contributing factor. The more immediate cause of death is the remarkable victory of Canada’s left-wing New Democratic Party in provincial elections in Alberta, which ended more than 40 years of conservative rule over the hub of Canada’s oil and gas industry.
For American readers who may be unfamiliar with Canadian politics, this is roughly equivalent to news that Democrats have taken the governor’s mansion and both houses of the state Legislature in Texas.
The victory for the liberal NDP (not to be confused with the Liberal Party, which won only one legislative seat) signaled a massive shift in the province’s government. After the election, Alberta’s incoming premier, Rachel Notley, promptly said she would stop spending provincial money to promote Keystone XL, which would deliver crude from northern Alberta’s bitumen reserves to refineries and export terminals on the U.S. Gulf coast, as well as providing an outlet for shale-oil wells in the Great Plains on both sides of the border.
Notley also promised to end provincial support for the proposed Northern Gateway pipeline, which would carry crude westward through British Columbia to new port facilities on the Pacific Ocean. Northern Gateway has been Plan B - though increasingly with overtones of becoming Plan A, despite significant opposition in British Columbia - in the seemingly inevitable event that President Obama finally makes a definitive decision to kill Keystone XL. The president, however, has been content to leave the project in administrative limbo for six years and to veto legislation passed earlier this year by the Republican-controlled Congress that would have forced its approval.
The Progressive Conservatives had held power in Edmonton, Alberta’s capital, since 1971 - midway through the first term of Canadian Prime Minister Pierre Trudeau. The historical juxtaposition is not merely coincidence. Trudeau, a Liberal, sought to tap western Canada’s rich resources to finance social programs in the rest of the country and to prop up the declining economies of the small Maritime Provinces. The oil price shocks of the 1970s promoted a long and nearly continuous energy boom in Alberta, which became a magnet for migrant workers from the rest of the country. The province enjoyed low taxes and relatively little government regulation.
But last year’s crash in oil prices put a strain on Alberta’s finances. Premier Jim Prentice tried to support the energy industry by holding the line on corporate taxes, but he pushed for higher individual taxes in this year’s budget. Prentice, in fact, called this election back in April specifically because he said he wanted a mandate for his budget from voters. (He replaced Alison Redford last fall, after she resigned amid controversy.) The NDP, in contrast, wants to revisit the royalties that oil and gas companies pay to Alberta for tapping the province’s mineral reserves, and Notley said she also wants to consider higher corporate taxes on the energy sector once prices recover.
Alberta has not become a bastion of liberalism overnight. Notley’s party gathered only a bit more than 40 percent of the vote. She came to power largely because the conservative vote in the province was split between Prentice’s Progressive Conservatives and the even-more-conservative Wildrose party. In the new Legislative Assembly, Wildrose will have nearly twice as many seats as the PC faction, making it the official opposition. Prentice announced his retirement from politics as soon as the ballot results were clear.
Environmental groups on both sides of the border will be ecstatic at the potentially fatal setback to the two pipeline projects. Without them, there will be very limited capacity to develop the abundant but unwieldy tarlike reserves in the subarctic forests of northern Alberta. Opponents tend to dislike most fossil fuel projects, but they particularly detest development in the tar sands region because the energy-intensive process can release large amounts of carbon dioxide.
We should assume there are smiles in places like Moscow, Tehran and Caracas, too. Those capitals have been hit much harder than Edmonton and Ottawa by falling prices for crude and natural gas, and anything that constrains North American supply is good news for them. This is particularly true for the Russians and Iranians, both of whom are assiduously trying to develop Chinese markets, in which oil moving through Northern Gateway would compete (though Tehran is currently hampered by sanctions that a nuclear deal sought by Obama would remove). The Iranians and the Russians might, in fact, be bigger and more durable winners in this week’s election than even the NDP.
If you agree with Obama that there is no greater threat to future generations than climate change, you probably will be pleased with the results of this week’s Alberta elections. If you think an aggressive Russia or a well-funded and even more aggressive Iran stand a better chance of killing more people sooner, you probably won’t. Either way, Alberta’s voters have changed the geopolitical landscape this week. We will be watching the results unfold for quite some time to come.